ORIGINAL

UNITED STATES OF AMERICA BEFORE THE FEDERAL TRADE COMMISSION

In the Matter of ) ) Docket No 9327 )

Polypore International Inc PUBLIC)a corporation )

)

RESPONDENTS PROPOSED FINDINGS OF FACT AND CONCLUSIONS OF LAW FOR RE-OPENED HEARING

Counsel for Respondent

Wiliam L Rikard Jr Eric D Welsh Deborah L Edney Adam C Shearer Brian R Weyhrich Sarah A Fulton Katie C Miler PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamrikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARKR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street

Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564

johngraybeal~parkerpoecom

PP AB 1631446v 1

Table of Contents i EXHIBIT AND WITNESS INDICES 1

II PROCEDURAL BACKGROUND 1

III ~ ~ 2

A ~ l 2

a f3

b f l 5

B f l 7

a f l 7

b f l 8

c f l 10

D f l 18

E t l 20

a f l 21

b f l 23

F f l 28

IV ~ ~ 32

V CONCLUSION 42

PPAB 1631446vl

I EXHIBIT AND WITNESS INDICES

A Exhibit Index - see Exhibit A hereto

B Witness Index - see Exhibit B hereto

II PROCEDURAL BACKGROUND

1494 On June 22 2009 after a five-week hearing in this proceeding the record was closed

1495 On September 25 2009 Respondent Polypore International Inc (Polypore or

Respondent) moved for a second time to re-open the record in this proceeding to permit the

introduction of new and additional evidence (the Second Motion to Re-open) By its Second

Motion to Re-open Respondent sought leave to introduce new and additional evidence regarding

(1) ~

~ and (2) ~ J set

forth in four proffers

1496 After briefing the Honorable D Michael Chappell granted Respondents Second Motion

to Re-open

1497 On November 122009 in connection with the Second Motion to Re-open a hearing was

held before Administrative Law Judge Chappell At the November 12 hearing Respondent

presented additional evidence to the Court through witnesses and exhibits regarding the four

proffers Respondent called two witnesses Mr Robert Toth (Toth) Chief Executive Officer

of Respondent and Mr Har D Seibert (Seibert) Vice President and Business Director for

Respondents Daramic subsidiary Respondent also cross-examined Mr Douglas Gilespie

(Gilespie) Vice President of Global Procurement for Exide who was called by Complaint

Counsel as their witness Respondent introduced 46 exhibits which were admitted into evidence

some over Complaint Counsels objections (Tr 5632-5642 5812 5841 Pre Tr 10-11 14-20)

Complaint Counsel called only Gilespie in rebuttaL The record of the November 12 2009

hearing was closed by Order dated November 232009 PPAB 1631446vl

1498 Respondent incorporates herein the definitions set forth in its Proposed Findings of Fact

and Conclusions of Law submitted on July 102009

III f lA i )

1499 On May 28 and May 292009 Gilespie testified in this proceeding (JX-9)

1500 At the time of the hearing this past spring ~

~ (RXOI720 in camera) ~

~ (Gilespie Tr 5807-08 in camera

see also RFOF 524 530 531)

1501 ~

~ (JX-9 in camera)

1502 ~

~ (RXOI119 in camera Hauswald

Tr 1118 Gilespie Tr 3126 in camera RXO 1120 in camera)

1503 ~

~ (Gilespie Tr 5855-56 in

camera)

PPAB 1631446vl 2

1504 At the time of the hearing this past summer ~

~ (Seibert Tr

5646-48 in camera RX01721 in camera)

a i 1505 ~

~ (RX01721 at 002 in

camera Seibert Tr 5648 in camera)

1506 ~

~ (Seibert Tr 5648-495662-63 in camera) ~

~ (Seibert Tr 5682 in camera) Even this year ~

~ (Seibert Tr 5681-83 in

camera RX01724 in camera) ~

~ (Seibert Tr 5682-83 in camera RX01724 in camera) t

~

PPAB 1631446vl 3

1507 ~

~ (Toth Tr 5648-49 in camera) ~

~ (Toth Tr 5749-50 in camera)

1508 ~

~ (Seibert Tr 5649

5658 in camera RX01667 at 002 in camera RX01668 at 002 in camera RX01669 at 002 in

camera RXOI713 in camera RX01718 in camera RX01714 at 001 (~

~) in camera)

1509 ~ ~ (Seibert

Tr 5651 in camera) ~

~ (Seibert Tr 5668 in camera)

1510 ~

~ (Seibert Tr 5668

in camera) t

~ (Seibert Tr 5668 in camera)

1511 This Cour finds Seibert to be a credible witness Seiberts testimony is consistent with

Respondents exhibits This Court credits Seiberts testimony in this matter In contrast for the

PPAB 1631446vl 4

reasons stated herein and previously this Cour does not find Gilespie to be a credible witness

The evidence adduced during the hearing on November 12 and May 28 and 29 2009

demonstrates that Exide has attempted to manipulate this proceeding by intentionally refraining

from certain relevant conduct until after the hearing record had been closed Gilespies

testimony on May 28 and 29 2009 was rehearsed with Complaint Counsel including Exides

recommendation of relief (RFOF 602) Accordingly this Cour does not credit Gilespies

testimony

b i ) 1512 After Gilespie testified in this hearing on May 28 and 29 2009 t

~ (Seibert Tr 5650 in camera RX01665 in

camera) ~

~ (RX01665 at 001 in

camera)

1513 t

~ (Seibert Tr 5650-51 5697 5669-70 in camera RX01665 at 002shy

003 in camera)

1514 In addition t

PPAB 1631446vl 5

~

(RX01665 at 003 in camera) ~

J (Gilespie Tr 2934 in

camera) and is further evidence that ~

~ and therefore contrary to Complaint Counsels assertions there are no significant

bariers to entry for battery separators due to testing whether for automotive motive or some

other application or use

1515 ~

~ (Seibert Tr 5670 in camera RX01697 in camera)

1516 At the hearing ~

~ (Gilespie Tr 5852 in camera) ~

~ (RX01665 at 001 in camera) ~

~ This Cour finds Gilespies

testimony not to be credible and further finds that Exide has attempted to manipulate this

proceeding to its benefit

PPAB 1631446vl 6

B i )

1517 t

~ (RXOI713 in camera RX01667 in camera Seibert Tr

5665 in camera) ~

~ (RXOI713 at 002

in camera) ~

~ (RXOI713 at 003 Seibert Tr 5657 in camera)

a i )

1518 ~

~ (Seibert Tr 5651-53 5655 in camera

RX01617 in camera)

1519 ~

~ (Seibert Tr 5651-52 5670 in camera) ~

~ (Seibert Tr 5652

in camera) ~ ~ (Seibert Tr 5652

in camera) ~

~ (Seibert Tr 5658 in camera)

1520 t

~ (Seibert Tr 5652-53 in camera) t

PPAB 1631446vl 7

~ (RX01667 at 002 in camera Seibert Tr 5658 in camera) ~

~ (Gilespie Tr 5858 in camera)

1521 ~

~ (RX01667 at 002 Seibert Tr 5670 in camera)

b i )

1522 ~

~ (RXOI668 in camera RX01669 in camera

Seibert Tr 5658-59 5662 in camera) ~

~ (RX01668 at 002 in camera Seibert Tr 5659-60 in camera Gilespie Tr

5839

in camera)

1523 At the same time ~

~ (RXO 1668 at 002

U ~) in camera Seibert

Tr 5734 in camera) ~

PPAB 1631446vl 8

~

1524 Upon learing that ~

~ (Seibert Tr 5660 in camera) t

~ (RX01720 at 035 in camera

Seibert Tr 5660 in camera) ~

~ (Seibert Tr 5660 in camera)

1525 ~

~ (Seibert Tr 5660-61 in camera) ~

~ (Seibert Tr 5661 in camera)

1526 In subsequent discussions ~

~ (Seibert Tr 5662-63 5666 in camera

Toth Tr 5749-50 in camera RX01714 at 002 in camera RX01718 at 002 in camera) In

addition ~

)

(Seibert Tr 5663-65 in camera Toth Tr 5750-51 5760-61 in camera RX01718 at 002 in

camera RX01683 in camera RX01714 at 002 in camera) t

~

PPAB 1631446vl 9

1527 ~

~

(Seibert Tr 5732-34 in camera)

1528 t

~ (Seibert Tr 5645 in camera Gilespie Tr 5851 in camera RX01665 in camera

RX01669 at 002 in camera RX01687 in camera)

c i ) 1529 After the record was closed on June 22 2009 ~

~ (RXOI676

in camera Seibert Tr 5674 in camera Gilespie Tr 5845 in camera) ~

~ (Seibert Tr 5673-74

5676-77 in camera Gilespie Tr 5845-46 in camera RX01676 in camera) t

~ (RXOI676 in camera JX-9 in camera

Gilespie Tr 5839 5843 in camera) Specifically ~

PPAB 1631446vl 10

Date Delivery PO Issued Quantityfeet SQM Date

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

Total ( i

HRX01676 in camera)

1530 t

~ (RX01667 at 001 in camera RX01670 at 001

in camera RX01671 at 001 in camera Seibert Tr 5675-76 in camera Gilespie Tr 5844 in

camera)

1531 ~

~ (Seibert Tr 5673-74 5679 in camera) ~

~ (Gilespie Tr 5842-43 in camera) t

PPAB 1631446vl 11

~ (Gilespie Tr 5843 in camera Toth Tr 5752-53 in camera

RX01686 in camera)

1532 Based on past practice ~

~ (Seibert Tr 5671 in camera JX-9 in camera) In

contrast ~

~

(RXOI676 in camera JX-9 in camera Seibert Tr 5673-74 in camera Gilespie Tr 5839 in

camera)

1533 ~

~ (Seibert Tr 5671 in

camera) ~

~ (Seibert Tr 5672 in camera

RX01723 in camera) ~

~ (Seibert Tr 5673

in camera RXO 1708 (~

~) in camera)

1534 ~

~ (Seibert Tr 5678-79 5709-10 in

camera) t

~ (RXOI698 in

camera Seibert Tr 5672 in camera) ~

PPAB 1631446vl 12

~ (RXOI699 in camera Seibert Tr 5672-73 in camera)

1535 ~

)J (Seibert Tr 5674 in

camera) ~ ~ (Seibert Tr

5683 in camera) ~

~ (Seibert Tr 5682-83 in camera RXO 1724 in camera) ~

~ (RXOI723 in camera Gilespie Tr 5837 in camera)

1536 Moreover ~

~ (Seibert

Tr 5681-82 in camera) In addition ~ ~ (Seibert Tr

5682-83 in camera RX01724 in camera) ~

~ (Gilespie Tr 5849-50 in camera) ~

~ (RXOI724 in camera Seibert Tr 5683 in camera) For example

~

~ (RXOI724

in camera) Similarly ~

~ (RXOI724 in camera) ~

~

PPAB 1631446vl 13

1537 ~

~ (Seibert Tr 5683 in camera) ~

~

(RXOI717 in camera Gilespie Tr 5848-49 in camera Seibert Tr 5683-84 in camera)

Here ~

n (Seibert Tr 5676-77 5732 in camera)

1538 ~

~

(Gilespie 5842-43 in camera)

1539 ~

PPAB 1631446vl 14

~ (Seibert Tr 5680-81

in camera)

1540 ~

~

(Seibert Tr 5677-78 in camera) ~

~ (RXOI693 in camera Seibert Tr 5679-80 in camera) ~

~ (Gilespie Tr 5862 in camera) Yet ~

~ (Gilespie Tr 5846 in camera) ~

~ (Gilespie Tr 5849 in camera) In any event ~

~ (Seibert Tr 5672

in camera)

1541 t

~ (Siebert Tr 5684-85 in camera

Gilespie Tr 5840-41 in camera RX01681 in camera) ~

~ (Gilespie Tr 5840 in

PPAB 1631446vl 15

camera) ~

~ (RXOI681 in camera) ~

~ (Gilespie Tr

5839 in camera) Again Gilespies testimony is not credible

1542 ~

~ (Gilespie Tr 5836-37 in camera) ~

~ (Gilespie Tr 5843 RXOI726)

1543 ~

PPAB 1631446vl 16

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

I EXHIBIT AND WITNESS INDICES

A Exhibit Index - see Exhibit A hereto

B Witness Index - see Exhibit B hereto

II PROCEDURAL BACKGROUND

1494 On June 22 2009 after a five-week hearing in this proceeding the record was closed

1495 On September 25 2009 Respondent Polypore International Inc (Polypore or

Respondent) moved for a second time to re-open the record in this proceeding to permit the

introduction of new and additional evidence (the Second Motion to Re-open) By its Second

Motion to Re-open Respondent sought leave to introduce new and additional evidence regarding

(1) ~

~ and (2) ~ J set

forth in four proffers

1496 After briefing the Honorable D Michael Chappell granted Respondents Second Motion

to Re-open

1497 On November 122009 in connection with the Second Motion to Re-open a hearing was

held before Administrative Law Judge Chappell At the November 12 hearing Respondent

presented additional evidence to the Court through witnesses and exhibits regarding the four

proffers Respondent called two witnesses Mr Robert Toth (Toth) Chief Executive Officer

of Respondent and Mr Har D Seibert (Seibert) Vice President and Business Director for

Respondents Daramic subsidiary Respondent also cross-examined Mr Douglas Gilespie

(Gilespie) Vice President of Global Procurement for Exide who was called by Complaint

Counsel as their witness Respondent introduced 46 exhibits which were admitted into evidence

some over Complaint Counsels objections (Tr 5632-5642 5812 5841 Pre Tr 10-11 14-20)

Complaint Counsel called only Gilespie in rebuttaL The record of the November 12 2009

hearing was closed by Order dated November 232009 PPAB 1631446vl

1498 Respondent incorporates herein the definitions set forth in its Proposed Findings of Fact

and Conclusions of Law submitted on July 102009

III f lA i )

1499 On May 28 and May 292009 Gilespie testified in this proceeding (JX-9)

1500 At the time of the hearing this past spring ~

~ (RXOI720 in camera) ~

~ (Gilespie Tr 5807-08 in camera

see also RFOF 524 530 531)

1501 ~

~ (JX-9 in camera)

1502 ~

~ (RXOI119 in camera Hauswald

Tr 1118 Gilespie Tr 3126 in camera RXO 1120 in camera)

1503 ~

~ (Gilespie Tr 5855-56 in

camera)

PPAB 1631446vl 2

1504 At the time of the hearing this past summer ~

~ (Seibert Tr

5646-48 in camera RX01721 in camera)

a i 1505 ~

~ (RX01721 at 002 in

camera Seibert Tr 5648 in camera)

1506 ~

~ (Seibert Tr 5648-495662-63 in camera) ~

~ (Seibert Tr 5682 in camera) Even this year ~

~ (Seibert Tr 5681-83 in

camera RX01724 in camera) ~

~ (Seibert Tr 5682-83 in camera RX01724 in camera) t

~

PPAB 1631446vl 3

1507 ~

~ (Toth Tr 5648-49 in camera) ~

~ (Toth Tr 5749-50 in camera)

1508 ~

~ (Seibert Tr 5649

5658 in camera RX01667 at 002 in camera RX01668 at 002 in camera RX01669 at 002 in

camera RXOI713 in camera RX01718 in camera RX01714 at 001 (~

~) in camera)

1509 ~ ~ (Seibert

Tr 5651 in camera) ~

~ (Seibert Tr 5668 in camera)

1510 ~

~ (Seibert Tr 5668

in camera) t

~ (Seibert Tr 5668 in camera)

1511 This Cour finds Seibert to be a credible witness Seiberts testimony is consistent with

Respondents exhibits This Court credits Seiberts testimony in this matter In contrast for the

PPAB 1631446vl 4

reasons stated herein and previously this Cour does not find Gilespie to be a credible witness

The evidence adduced during the hearing on November 12 and May 28 and 29 2009

demonstrates that Exide has attempted to manipulate this proceeding by intentionally refraining

from certain relevant conduct until after the hearing record had been closed Gilespies

testimony on May 28 and 29 2009 was rehearsed with Complaint Counsel including Exides

recommendation of relief (RFOF 602) Accordingly this Cour does not credit Gilespies

testimony

b i ) 1512 After Gilespie testified in this hearing on May 28 and 29 2009 t

~ (Seibert Tr 5650 in camera RX01665 in

camera) ~

~ (RX01665 at 001 in

camera)

1513 t

~ (Seibert Tr 5650-51 5697 5669-70 in camera RX01665 at 002shy

003 in camera)

1514 In addition t

PPAB 1631446vl 5

~

(RX01665 at 003 in camera) ~

J (Gilespie Tr 2934 in

camera) and is further evidence that ~

~ and therefore contrary to Complaint Counsels assertions there are no significant

bariers to entry for battery separators due to testing whether for automotive motive or some

other application or use

1515 ~

~ (Seibert Tr 5670 in camera RX01697 in camera)

1516 At the hearing ~

~ (Gilespie Tr 5852 in camera) ~

~ (RX01665 at 001 in camera) ~

~ This Cour finds Gilespies

testimony not to be credible and further finds that Exide has attempted to manipulate this

proceeding to its benefit

PPAB 1631446vl 6

B i )

1517 t

~ (RXOI713 in camera RX01667 in camera Seibert Tr

5665 in camera) ~

~ (RXOI713 at 002

in camera) ~

~ (RXOI713 at 003 Seibert Tr 5657 in camera)

a i )

1518 ~

~ (Seibert Tr 5651-53 5655 in camera

RX01617 in camera)

1519 ~

~ (Seibert Tr 5651-52 5670 in camera) ~

~ (Seibert Tr 5652

in camera) ~ ~ (Seibert Tr 5652

in camera) ~

~ (Seibert Tr 5658 in camera)

1520 t

~ (Seibert Tr 5652-53 in camera) t

PPAB 1631446vl 7

~ (RX01667 at 002 in camera Seibert Tr 5658 in camera) ~

~ (Gilespie Tr 5858 in camera)

1521 ~

~ (RX01667 at 002 Seibert Tr 5670 in camera)

b i )

1522 ~

~ (RXOI668 in camera RX01669 in camera

Seibert Tr 5658-59 5662 in camera) ~

~ (RX01668 at 002 in camera Seibert Tr 5659-60 in camera Gilespie Tr

5839

in camera)

1523 At the same time ~

~ (RXO 1668 at 002

U ~) in camera Seibert

Tr 5734 in camera) ~

PPAB 1631446vl 8

~

1524 Upon learing that ~

~ (Seibert Tr 5660 in camera) t

~ (RX01720 at 035 in camera

Seibert Tr 5660 in camera) ~

~ (Seibert Tr 5660 in camera)

1525 ~

~ (Seibert Tr 5660-61 in camera) ~

~ (Seibert Tr 5661 in camera)

1526 In subsequent discussions ~

~ (Seibert Tr 5662-63 5666 in camera

Toth Tr 5749-50 in camera RX01714 at 002 in camera RX01718 at 002 in camera) In

addition ~

)

(Seibert Tr 5663-65 in camera Toth Tr 5750-51 5760-61 in camera RX01718 at 002 in

camera RX01683 in camera RX01714 at 002 in camera) t

~

PPAB 1631446vl 9

1527 ~

~

(Seibert Tr 5732-34 in camera)

1528 t

~ (Seibert Tr 5645 in camera Gilespie Tr 5851 in camera RX01665 in camera

RX01669 at 002 in camera RX01687 in camera)

c i ) 1529 After the record was closed on June 22 2009 ~

~ (RXOI676

in camera Seibert Tr 5674 in camera Gilespie Tr 5845 in camera) ~

~ (Seibert Tr 5673-74

5676-77 in camera Gilespie Tr 5845-46 in camera RX01676 in camera) t

~ (RXOI676 in camera JX-9 in camera

Gilespie Tr 5839 5843 in camera) Specifically ~

PPAB 1631446vl 10

Date Delivery PO Issued Quantityfeet SQM Date

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

Total ( i

HRX01676 in camera)

1530 t

~ (RX01667 at 001 in camera RX01670 at 001

in camera RX01671 at 001 in camera Seibert Tr 5675-76 in camera Gilespie Tr 5844 in

camera)

1531 ~

~ (Seibert Tr 5673-74 5679 in camera) ~

~ (Gilespie Tr 5842-43 in camera) t

PPAB 1631446vl 11

~ (Gilespie Tr 5843 in camera Toth Tr 5752-53 in camera

RX01686 in camera)

1532 Based on past practice ~

~ (Seibert Tr 5671 in camera JX-9 in camera) In

contrast ~

~

(RXOI676 in camera JX-9 in camera Seibert Tr 5673-74 in camera Gilespie Tr 5839 in

camera)

1533 ~

~ (Seibert Tr 5671 in

camera) ~

~ (Seibert Tr 5672 in camera

RX01723 in camera) ~

~ (Seibert Tr 5673

in camera RXO 1708 (~

~) in camera)

1534 ~

~ (Seibert Tr 5678-79 5709-10 in

camera) t

~ (RXOI698 in

camera Seibert Tr 5672 in camera) ~

PPAB 1631446vl 12

~ (RXOI699 in camera Seibert Tr 5672-73 in camera)

1535 ~

)J (Seibert Tr 5674 in

camera) ~ ~ (Seibert Tr

5683 in camera) ~

~ (Seibert Tr 5682-83 in camera RXO 1724 in camera) ~

~ (RXOI723 in camera Gilespie Tr 5837 in camera)

1536 Moreover ~

~ (Seibert

Tr 5681-82 in camera) In addition ~ ~ (Seibert Tr

5682-83 in camera RX01724 in camera) ~

~ (Gilespie Tr 5849-50 in camera) ~

~ (RXOI724 in camera Seibert Tr 5683 in camera) For example

~

~ (RXOI724

in camera) Similarly ~

~ (RXOI724 in camera) ~

~

PPAB 1631446vl 13

1537 ~

~ (Seibert Tr 5683 in camera) ~

~

(RXOI717 in camera Gilespie Tr 5848-49 in camera Seibert Tr 5683-84 in camera)

Here ~

n (Seibert Tr 5676-77 5732 in camera)

1538 ~

~

(Gilespie 5842-43 in camera)

1539 ~

PPAB 1631446vl 14

~ (Seibert Tr 5680-81

in camera)

1540 ~

~

(Seibert Tr 5677-78 in camera) ~

~ (RXOI693 in camera Seibert Tr 5679-80 in camera) ~

~ (Gilespie Tr 5862 in camera) Yet ~

~ (Gilespie Tr 5846 in camera) ~

~ (Gilespie Tr 5849 in camera) In any event ~

~ (Seibert Tr 5672

in camera)

1541 t

~ (Siebert Tr 5684-85 in camera

Gilespie Tr 5840-41 in camera RX01681 in camera) ~

~ (Gilespie Tr 5840 in

PPAB 1631446vl 15

camera) ~

~ (RXOI681 in camera) ~

~ (Gilespie Tr

5839 in camera) Again Gilespies testimony is not credible

1542 ~

~ (Gilespie Tr 5836-37 in camera) ~

~ (Gilespie Tr 5843 RXOI726)

1543 ~

PPAB 1631446vl 16

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

1498 Respondent incorporates herein the definitions set forth in its Proposed Findings of Fact

and Conclusions of Law submitted on July 102009

III f lA i )

1499 On May 28 and May 292009 Gilespie testified in this proceeding (JX-9)

1500 At the time of the hearing this past spring ~

~ (RXOI720 in camera) ~

~ (Gilespie Tr 5807-08 in camera

see also RFOF 524 530 531)

1501 ~

~ (JX-9 in camera)

1502 ~

~ (RXOI119 in camera Hauswald

Tr 1118 Gilespie Tr 3126 in camera RXO 1120 in camera)

1503 ~

~ (Gilespie Tr 5855-56 in

camera)

PPAB 1631446vl 2

1504 At the time of the hearing this past summer ~

~ (Seibert Tr

5646-48 in camera RX01721 in camera)

a i 1505 ~

~ (RX01721 at 002 in

camera Seibert Tr 5648 in camera)

1506 ~

~ (Seibert Tr 5648-495662-63 in camera) ~

~ (Seibert Tr 5682 in camera) Even this year ~

~ (Seibert Tr 5681-83 in

camera RX01724 in camera) ~

~ (Seibert Tr 5682-83 in camera RX01724 in camera) t

~

PPAB 1631446vl 3

1507 ~

~ (Toth Tr 5648-49 in camera) ~

~ (Toth Tr 5749-50 in camera)

1508 ~

~ (Seibert Tr 5649

5658 in camera RX01667 at 002 in camera RX01668 at 002 in camera RX01669 at 002 in

camera RXOI713 in camera RX01718 in camera RX01714 at 001 (~

~) in camera)

1509 ~ ~ (Seibert

Tr 5651 in camera) ~

~ (Seibert Tr 5668 in camera)

1510 ~

~ (Seibert Tr 5668

in camera) t

~ (Seibert Tr 5668 in camera)

1511 This Cour finds Seibert to be a credible witness Seiberts testimony is consistent with

Respondents exhibits This Court credits Seiberts testimony in this matter In contrast for the

PPAB 1631446vl 4

reasons stated herein and previously this Cour does not find Gilespie to be a credible witness

The evidence adduced during the hearing on November 12 and May 28 and 29 2009

demonstrates that Exide has attempted to manipulate this proceeding by intentionally refraining

from certain relevant conduct until after the hearing record had been closed Gilespies

testimony on May 28 and 29 2009 was rehearsed with Complaint Counsel including Exides

recommendation of relief (RFOF 602) Accordingly this Cour does not credit Gilespies

testimony

b i ) 1512 After Gilespie testified in this hearing on May 28 and 29 2009 t

~ (Seibert Tr 5650 in camera RX01665 in

camera) ~

~ (RX01665 at 001 in

camera)

1513 t

~ (Seibert Tr 5650-51 5697 5669-70 in camera RX01665 at 002shy

003 in camera)

1514 In addition t

PPAB 1631446vl 5

~

(RX01665 at 003 in camera) ~

J (Gilespie Tr 2934 in

camera) and is further evidence that ~

~ and therefore contrary to Complaint Counsels assertions there are no significant

bariers to entry for battery separators due to testing whether for automotive motive or some

other application or use

1515 ~

~ (Seibert Tr 5670 in camera RX01697 in camera)

1516 At the hearing ~

~ (Gilespie Tr 5852 in camera) ~

~ (RX01665 at 001 in camera) ~

~ This Cour finds Gilespies

testimony not to be credible and further finds that Exide has attempted to manipulate this

proceeding to its benefit

PPAB 1631446vl 6

B i )

1517 t

~ (RXOI713 in camera RX01667 in camera Seibert Tr

5665 in camera) ~

~ (RXOI713 at 002

in camera) ~

~ (RXOI713 at 003 Seibert Tr 5657 in camera)

a i )

1518 ~

~ (Seibert Tr 5651-53 5655 in camera

RX01617 in camera)

1519 ~

~ (Seibert Tr 5651-52 5670 in camera) ~

~ (Seibert Tr 5652

in camera) ~ ~ (Seibert Tr 5652

in camera) ~

~ (Seibert Tr 5658 in camera)

1520 t

~ (Seibert Tr 5652-53 in camera) t

PPAB 1631446vl 7

~ (RX01667 at 002 in camera Seibert Tr 5658 in camera) ~

~ (Gilespie Tr 5858 in camera)

1521 ~

~ (RX01667 at 002 Seibert Tr 5670 in camera)

b i )

1522 ~

~ (RXOI668 in camera RX01669 in camera

Seibert Tr 5658-59 5662 in camera) ~

~ (RX01668 at 002 in camera Seibert Tr 5659-60 in camera Gilespie Tr

5839

in camera)

1523 At the same time ~

~ (RXO 1668 at 002

U ~) in camera Seibert

Tr 5734 in camera) ~

PPAB 1631446vl 8

~

1524 Upon learing that ~

~ (Seibert Tr 5660 in camera) t

~ (RX01720 at 035 in camera

Seibert Tr 5660 in camera) ~

~ (Seibert Tr 5660 in camera)

1525 ~

~ (Seibert Tr 5660-61 in camera) ~

~ (Seibert Tr 5661 in camera)

1526 In subsequent discussions ~

~ (Seibert Tr 5662-63 5666 in camera

Toth Tr 5749-50 in camera RX01714 at 002 in camera RX01718 at 002 in camera) In

addition ~

)

(Seibert Tr 5663-65 in camera Toth Tr 5750-51 5760-61 in camera RX01718 at 002 in

camera RX01683 in camera RX01714 at 002 in camera) t

~

PPAB 1631446vl 9

1527 ~

~

(Seibert Tr 5732-34 in camera)

1528 t

~ (Seibert Tr 5645 in camera Gilespie Tr 5851 in camera RX01665 in camera

RX01669 at 002 in camera RX01687 in camera)

c i ) 1529 After the record was closed on June 22 2009 ~

~ (RXOI676

in camera Seibert Tr 5674 in camera Gilespie Tr 5845 in camera) ~

~ (Seibert Tr 5673-74

5676-77 in camera Gilespie Tr 5845-46 in camera RX01676 in camera) t

~ (RXOI676 in camera JX-9 in camera

Gilespie Tr 5839 5843 in camera) Specifically ~

PPAB 1631446vl 10

Date Delivery PO Issued Quantityfeet SQM Date

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

Total ( i

HRX01676 in camera)

1530 t

~ (RX01667 at 001 in camera RX01670 at 001

in camera RX01671 at 001 in camera Seibert Tr 5675-76 in camera Gilespie Tr 5844 in

camera)

1531 ~

~ (Seibert Tr 5673-74 5679 in camera) ~

~ (Gilespie Tr 5842-43 in camera) t

PPAB 1631446vl 11

~ (Gilespie Tr 5843 in camera Toth Tr 5752-53 in camera

RX01686 in camera)

1532 Based on past practice ~

~ (Seibert Tr 5671 in camera JX-9 in camera) In

contrast ~

~

(RXOI676 in camera JX-9 in camera Seibert Tr 5673-74 in camera Gilespie Tr 5839 in

camera)

1533 ~

~ (Seibert Tr 5671 in

camera) ~

~ (Seibert Tr 5672 in camera

RX01723 in camera) ~

~ (Seibert Tr 5673

in camera RXO 1708 (~

~) in camera)

1534 ~

~ (Seibert Tr 5678-79 5709-10 in

camera) t

~ (RXOI698 in

camera Seibert Tr 5672 in camera) ~

PPAB 1631446vl 12

~ (RXOI699 in camera Seibert Tr 5672-73 in camera)

1535 ~

)J (Seibert Tr 5674 in

camera) ~ ~ (Seibert Tr

5683 in camera) ~

~ (Seibert Tr 5682-83 in camera RXO 1724 in camera) ~

~ (RXOI723 in camera Gilespie Tr 5837 in camera)

1536 Moreover ~

~ (Seibert

Tr 5681-82 in camera) In addition ~ ~ (Seibert Tr

5682-83 in camera RX01724 in camera) ~

~ (Gilespie Tr 5849-50 in camera) ~

~ (RXOI724 in camera Seibert Tr 5683 in camera) For example

~

~ (RXOI724

in camera) Similarly ~

~ (RXOI724 in camera) ~

~

PPAB 1631446vl 13

1537 ~

~ (Seibert Tr 5683 in camera) ~

~

(RXOI717 in camera Gilespie Tr 5848-49 in camera Seibert Tr 5683-84 in camera)

Here ~

n (Seibert Tr 5676-77 5732 in camera)

1538 ~

~

(Gilespie 5842-43 in camera)

1539 ~

PPAB 1631446vl 14

~ (Seibert Tr 5680-81

in camera)

1540 ~

~

(Seibert Tr 5677-78 in camera) ~

~ (RXOI693 in camera Seibert Tr 5679-80 in camera) ~

~ (Gilespie Tr 5862 in camera) Yet ~

~ (Gilespie Tr 5846 in camera) ~

~ (Gilespie Tr 5849 in camera) In any event ~

~ (Seibert Tr 5672

in camera)

1541 t

~ (Siebert Tr 5684-85 in camera

Gilespie Tr 5840-41 in camera RX01681 in camera) ~

~ (Gilespie Tr 5840 in

PPAB 1631446vl 15

camera) ~

~ (RXOI681 in camera) ~

~ (Gilespie Tr

5839 in camera) Again Gilespies testimony is not credible

1542 ~

~ (Gilespie Tr 5836-37 in camera) ~

~ (Gilespie Tr 5843 RXOI726)

1543 ~

PPAB 1631446vl 16

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

1504 At the time of the hearing this past summer ~

~ (Seibert Tr

5646-48 in camera RX01721 in camera)

a i 1505 ~

~ (RX01721 at 002 in

camera Seibert Tr 5648 in camera)

1506 ~

~ (Seibert Tr 5648-495662-63 in camera) ~

~ (Seibert Tr 5682 in camera) Even this year ~

~ (Seibert Tr 5681-83 in

camera RX01724 in camera) ~

~ (Seibert Tr 5682-83 in camera RX01724 in camera) t

~

PPAB 1631446vl 3

1507 ~

~ (Toth Tr 5648-49 in camera) ~

~ (Toth Tr 5749-50 in camera)

1508 ~

~ (Seibert Tr 5649

5658 in camera RX01667 at 002 in camera RX01668 at 002 in camera RX01669 at 002 in

camera RXOI713 in camera RX01718 in camera RX01714 at 001 (~

~) in camera)

1509 ~ ~ (Seibert

Tr 5651 in camera) ~

~ (Seibert Tr 5668 in camera)

1510 ~

~ (Seibert Tr 5668

in camera) t

~ (Seibert Tr 5668 in camera)

1511 This Cour finds Seibert to be a credible witness Seiberts testimony is consistent with

Respondents exhibits This Court credits Seiberts testimony in this matter In contrast for the

PPAB 1631446vl 4

reasons stated herein and previously this Cour does not find Gilespie to be a credible witness

The evidence adduced during the hearing on November 12 and May 28 and 29 2009

demonstrates that Exide has attempted to manipulate this proceeding by intentionally refraining

from certain relevant conduct until after the hearing record had been closed Gilespies

testimony on May 28 and 29 2009 was rehearsed with Complaint Counsel including Exides

recommendation of relief (RFOF 602) Accordingly this Cour does not credit Gilespies

testimony

b i ) 1512 After Gilespie testified in this hearing on May 28 and 29 2009 t

~ (Seibert Tr 5650 in camera RX01665 in

camera) ~

~ (RX01665 at 001 in

camera)

1513 t

~ (Seibert Tr 5650-51 5697 5669-70 in camera RX01665 at 002shy

003 in camera)

1514 In addition t

PPAB 1631446vl 5

~

(RX01665 at 003 in camera) ~

J (Gilespie Tr 2934 in

camera) and is further evidence that ~

~ and therefore contrary to Complaint Counsels assertions there are no significant

bariers to entry for battery separators due to testing whether for automotive motive or some

other application or use

1515 ~

~ (Seibert Tr 5670 in camera RX01697 in camera)

1516 At the hearing ~

~ (Gilespie Tr 5852 in camera) ~

~ (RX01665 at 001 in camera) ~

~ This Cour finds Gilespies

testimony not to be credible and further finds that Exide has attempted to manipulate this

proceeding to its benefit

PPAB 1631446vl 6

B i )

1517 t

~ (RXOI713 in camera RX01667 in camera Seibert Tr

5665 in camera) ~

~ (RXOI713 at 002

in camera) ~

~ (RXOI713 at 003 Seibert Tr 5657 in camera)

a i )

1518 ~

~ (Seibert Tr 5651-53 5655 in camera

RX01617 in camera)

1519 ~

~ (Seibert Tr 5651-52 5670 in camera) ~

~ (Seibert Tr 5652

in camera) ~ ~ (Seibert Tr 5652

in camera) ~

~ (Seibert Tr 5658 in camera)

1520 t

~ (Seibert Tr 5652-53 in camera) t

PPAB 1631446vl 7

~ (RX01667 at 002 in camera Seibert Tr 5658 in camera) ~

~ (Gilespie Tr 5858 in camera)

1521 ~

~ (RX01667 at 002 Seibert Tr 5670 in camera)

b i )

1522 ~

~ (RXOI668 in camera RX01669 in camera

Seibert Tr 5658-59 5662 in camera) ~

~ (RX01668 at 002 in camera Seibert Tr 5659-60 in camera Gilespie Tr

5839

in camera)

1523 At the same time ~

~ (RXO 1668 at 002

U ~) in camera Seibert

Tr 5734 in camera) ~

PPAB 1631446vl 8

~

1524 Upon learing that ~

~ (Seibert Tr 5660 in camera) t

~ (RX01720 at 035 in camera

Seibert Tr 5660 in camera) ~

~ (Seibert Tr 5660 in camera)

1525 ~

~ (Seibert Tr 5660-61 in camera) ~

~ (Seibert Tr 5661 in camera)

1526 In subsequent discussions ~

~ (Seibert Tr 5662-63 5666 in camera

Toth Tr 5749-50 in camera RX01714 at 002 in camera RX01718 at 002 in camera) In

addition ~

)

(Seibert Tr 5663-65 in camera Toth Tr 5750-51 5760-61 in camera RX01718 at 002 in

camera RX01683 in camera RX01714 at 002 in camera) t

~

PPAB 1631446vl 9

1527 ~

~

(Seibert Tr 5732-34 in camera)

1528 t

~ (Seibert Tr 5645 in camera Gilespie Tr 5851 in camera RX01665 in camera

RX01669 at 002 in camera RX01687 in camera)

c i ) 1529 After the record was closed on June 22 2009 ~

~ (RXOI676

in camera Seibert Tr 5674 in camera Gilespie Tr 5845 in camera) ~

~ (Seibert Tr 5673-74

5676-77 in camera Gilespie Tr 5845-46 in camera RX01676 in camera) t

~ (RXOI676 in camera JX-9 in camera

Gilespie Tr 5839 5843 in camera) Specifically ~

PPAB 1631446vl 10

Date Delivery PO Issued Quantityfeet SQM Date

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

Total ( i

HRX01676 in camera)

1530 t

~ (RX01667 at 001 in camera RX01670 at 001

in camera RX01671 at 001 in camera Seibert Tr 5675-76 in camera Gilespie Tr 5844 in

camera)

1531 ~

~ (Seibert Tr 5673-74 5679 in camera) ~

~ (Gilespie Tr 5842-43 in camera) t

PPAB 1631446vl 11

~ (Gilespie Tr 5843 in camera Toth Tr 5752-53 in camera

RX01686 in camera)

1532 Based on past practice ~

~ (Seibert Tr 5671 in camera JX-9 in camera) In

contrast ~

~

(RXOI676 in camera JX-9 in camera Seibert Tr 5673-74 in camera Gilespie Tr 5839 in

camera)

1533 ~

~ (Seibert Tr 5671 in

camera) ~

~ (Seibert Tr 5672 in camera

RX01723 in camera) ~

~ (Seibert Tr 5673

in camera RXO 1708 (~

~) in camera)

1534 ~

~ (Seibert Tr 5678-79 5709-10 in

camera) t

~ (RXOI698 in

camera Seibert Tr 5672 in camera) ~

PPAB 1631446vl 12

~ (RXOI699 in camera Seibert Tr 5672-73 in camera)

1535 ~

)J (Seibert Tr 5674 in

camera) ~ ~ (Seibert Tr

5683 in camera) ~

~ (Seibert Tr 5682-83 in camera RXO 1724 in camera) ~

~ (RXOI723 in camera Gilespie Tr 5837 in camera)

1536 Moreover ~

~ (Seibert

Tr 5681-82 in camera) In addition ~ ~ (Seibert Tr

5682-83 in camera RX01724 in camera) ~

~ (Gilespie Tr 5849-50 in camera) ~

~ (RXOI724 in camera Seibert Tr 5683 in camera) For example

~

~ (RXOI724

in camera) Similarly ~

~ (RXOI724 in camera) ~

~

PPAB 1631446vl 13

1537 ~

~ (Seibert Tr 5683 in camera) ~

~

(RXOI717 in camera Gilespie Tr 5848-49 in camera Seibert Tr 5683-84 in camera)

Here ~

n (Seibert Tr 5676-77 5732 in camera)

1538 ~

~

(Gilespie 5842-43 in camera)

1539 ~

PPAB 1631446vl 14

~ (Seibert Tr 5680-81

in camera)

1540 ~

~

(Seibert Tr 5677-78 in camera) ~

~ (RXOI693 in camera Seibert Tr 5679-80 in camera) ~

~ (Gilespie Tr 5862 in camera) Yet ~

~ (Gilespie Tr 5846 in camera) ~

~ (Gilespie Tr 5849 in camera) In any event ~

~ (Seibert Tr 5672

in camera)

1541 t

~ (Siebert Tr 5684-85 in camera

Gilespie Tr 5840-41 in camera RX01681 in camera) ~

~ (Gilespie Tr 5840 in

PPAB 1631446vl 15

camera) ~

~ (RXOI681 in camera) ~

~ (Gilespie Tr

5839 in camera) Again Gilespies testimony is not credible

1542 ~

~ (Gilespie Tr 5836-37 in camera) ~

~ (Gilespie Tr 5843 RXOI726)

1543 ~

PPAB 1631446vl 16

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

1507 ~

~ (Toth Tr 5648-49 in camera) ~

~ (Toth Tr 5749-50 in camera)

1508 ~

~ (Seibert Tr 5649

5658 in camera RX01667 at 002 in camera RX01668 at 002 in camera RX01669 at 002 in

camera RXOI713 in camera RX01718 in camera RX01714 at 001 (~

~) in camera)

1509 ~ ~ (Seibert

Tr 5651 in camera) ~

~ (Seibert Tr 5668 in camera)

1510 ~

~ (Seibert Tr 5668

in camera) t

~ (Seibert Tr 5668 in camera)

1511 This Cour finds Seibert to be a credible witness Seiberts testimony is consistent with

Respondents exhibits This Court credits Seiberts testimony in this matter In contrast for the

PPAB 1631446vl 4

reasons stated herein and previously this Cour does not find Gilespie to be a credible witness

The evidence adduced during the hearing on November 12 and May 28 and 29 2009

demonstrates that Exide has attempted to manipulate this proceeding by intentionally refraining

from certain relevant conduct until after the hearing record had been closed Gilespies

testimony on May 28 and 29 2009 was rehearsed with Complaint Counsel including Exides

recommendation of relief (RFOF 602) Accordingly this Cour does not credit Gilespies

testimony

b i ) 1512 After Gilespie testified in this hearing on May 28 and 29 2009 t

~ (Seibert Tr 5650 in camera RX01665 in

camera) ~

~ (RX01665 at 001 in

camera)

1513 t

~ (Seibert Tr 5650-51 5697 5669-70 in camera RX01665 at 002shy

003 in camera)

1514 In addition t

PPAB 1631446vl 5

~

(RX01665 at 003 in camera) ~

J (Gilespie Tr 2934 in

camera) and is further evidence that ~

~ and therefore contrary to Complaint Counsels assertions there are no significant

bariers to entry for battery separators due to testing whether for automotive motive or some

other application or use

1515 ~

~ (Seibert Tr 5670 in camera RX01697 in camera)

1516 At the hearing ~

~ (Gilespie Tr 5852 in camera) ~

~ (RX01665 at 001 in camera) ~

~ This Cour finds Gilespies

testimony not to be credible and further finds that Exide has attempted to manipulate this

proceeding to its benefit

PPAB 1631446vl 6

B i )

1517 t

~ (RXOI713 in camera RX01667 in camera Seibert Tr

5665 in camera) ~

~ (RXOI713 at 002

in camera) ~

~ (RXOI713 at 003 Seibert Tr 5657 in camera)

a i )

1518 ~

~ (Seibert Tr 5651-53 5655 in camera

RX01617 in camera)

1519 ~

~ (Seibert Tr 5651-52 5670 in camera) ~

~ (Seibert Tr 5652

in camera) ~ ~ (Seibert Tr 5652

in camera) ~

~ (Seibert Tr 5658 in camera)

1520 t

~ (Seibert Tr 5652-53 in camera) t

PPAB 1631446vl 7

~ (RX01667 at 002 in camera Seibert Tr 5658 in camera) ~

~ (Gilespie Tr 5858 in camera)

1521 ~

~ (RX01667 at 002 Seibert Tr 5670 in camera)

b i )

1522 ~

~ (RXOI668 in camera RX01669 in camera

Seibert Tr 5658-59 5662 in camera) ~

~ (RX01668 at 002 in camera Seibert Tr 5659-60 in camera Gilespie Tr

5839

in camera)

1523 At the same time ~

~ (RXO 1668 at 002

U ~) in camera Seibert

Tr 5734 in camera) ~

PPAB 1631446vl 8

~

1524 Upon learing that ~

~ (Seibert Tr 5660 in camera) t

~ (RX01720 at 035 in camera

Seibert Tr 5660 in camera) ~

~ (Seibert Tr 5660 in camera)

1525 ~

~ (Seibert Tr 5660-61 in camera) ~

~ (Seibert Tr 5661 in camera)

1526 In subsequent discussions ~

~ (Seibert Tr 5662-63 5666 in camera

Toth Tr 5749-50 in camera RX01714 at 002 in camera RX01718 at 002 in camera) In

addition ~

)

(Seibert Tr 5663-65 in camera Toth Tr 5750-51 5760-61 in camera RX01718 at 002 in

camera RX01683 in camera RX01714 at 002 in camera) t

~

PPAB 1631446vl 9

1527 ~

~

(Seibert Tr 5732-34 in camera)

1528 t

~ (Seibert Tr 5645 in camera Gilespie Tr 5851 in camera RX01665 in camera

RX01669 at 002 in camera RX01687 in camera)

c i ) 1529 After the record was closed on June 22 2009 ~

~ (RXOI676

in camera Seibert Tr 5674 in camera Gilespie Tr 5845 in camera) ~

~ (Seibert Tr 5673-74

5676-77 in camera Gilespie Tr 5845-46 in camera RX01676 in camera) t

~ (RXOI676 in camera JX-9 in camera

Gilespie Tr 5839 5843 in camera) Specifically ~

PPAB 1631446vl 10

Date Delivery PO Issued Quantityfeet SQM Date

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

Total ( i

HRX01676 in camera)

1530 t

~ (RX01667 at 001 in camera RX01670 at 001

in camera RX01671 at 001 in camera Seibert Tr 5675-76 in camera Gilespie Tr 5844 in

camera)

1531 ~

~ (Seibert Tr 5673-74 5679 in camera) ~

~ (Gilespie Tr 5842-43 in camera) t

PPAB 1631446vl 11

~ (Gilespie Tr 5843 in camera Toth Tr 5752-53 in camera

RX01686 in camera)

1532 Based on past practice ~

~ (Seibert Tr 5671 in camera JX-9 in camera) In

contrast ~

~

(RXOI676 in camera JX-9 in camera Seibert Tr 5673-74 in camera Gilespie Tr 5839 in

camera)

1533 ~

~ (Seibert Tr 5671 in

camera) ~

~ (Seibert Tr 5672 in camera

RX01723 in camera) ~

~ (Seibert Tr 5673

in camera RXO 1708 (~

~) in camera)

1534 ~

~ (Seibert Tr 5678-79 5709-10 in

camera) t

~ (RXOI698 in

camera Seibert Tr 5672 in camera) ~

PPAB 1631446vl 12

~ (RXOI699 in camera Seibert Tr 5672-73 in camera)

1535 ~

)J (Seibert Tr 5674 in

camera) ~ ~ (Seibert Tr

5683 in camera) ~

~ (Seibert Tr 5682-83 in camera RXO 1724 in camera) ~

~ (RXOI723 in camera Gilespie Tr 5837 in camera)

1536 Moreover ~

~ (Seibert

Tr 5681-82 in camera) In addition ~ ~ (Seibert Tr

5682-83 in camera RX01724 in camera) ~

~ (Gilespie Tr 5849-50 in camera) ~

~ (RXOI724 in camera Seibert Tr 5683 in camera) For example

~

~ (RXOI724

in camera) Similarly ~

~ (RXOI724 in camera) ~

~

PPAB 1631446vl 13

1537 ~

~ (Seibert Tr 5683 in camera) ~

~

(RXOI717 in camera Gilespie Tr 5848-49 in camera Seibert Tr 5683-84 in camera)

Here ~

n (Seibert Tr 5676-77 5732 in camera)

1538 ~

~

(Gilespie 5842-43 in camera)

1539 ~

PPAB 1631446vl 14

~ (Seibert Tr 5680-81

in camera)

1540 ~

~

(Seibert Tr 5677-78 in camera) ~

~ (RXOI693 in camera Seibert Tr 5679-80 in camera) ~

~ (Gilespie Tr 5862 in camera) Yet ~

~ (Gilespie Tr 5846 in camera) ~

~ (Gilespie Tr 5849 in camera) In any event ~

~ (Seibert Tr 5672

in camera)

1541 t

~ (Siebert Tr 5684-85 in camera

Gilespie Tr 5840-41 in camera RX01681 in camera) ~

~ (Gilespie Tr 5840 in

PPAB 1631446vl 15

camera) ~

~ (RXOI681 in camera) ~

~ (Gilespie Tr

5839 in camera) Again Gilespies testimony is not credible

1542 ~

~ (Gilespie Tr 5836-37 in camera) ~

~ (Gilespie Tr 5843 RXOI726)

1543 ~

PPAB 1631446vl 16

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

reasons stated herein and previously this Cour does not find Gilespie to be a credible witness

The evidence adduced during the hearing on November 12 and May 28 and 29 2009

demonstrates that Exide has attempted to manipulate this proceeding by intentionally refraining

from certain relevant conduct until after the hearing record had been closed Gilespies

testimony on May 28 and 29 2009 was rehearsed with Complaint Counsel including Exides

recommendation of relief (RFOF 602) Accordingly this Cour does not credit Gilespies

testimony

b i ) 1512 After Gilespie testified in this hearing on May 28 and 29 2009 t

~ (Seibert Tr 5650 in camera RX01665 in

camera) ~

~ (RX01665 at 001 in

camera)

1513 t

~ (Seibert Tr 5650-51 5697 5669-70 in camera RX01665 at 002shy

003 in camera)

1514 In addition t

PPAB 1631446vl 5

~

(RX01665 at 003 in camera) ~

J (Gilespie Tr 2934 in

camera) and is further evidence that ~

~ and therefore contrary to Complaint Counsels assertions there are no significant

bariers to entry for battery separators due to testing whether for automotive motive or some

other application or use

1515 ~

~ (Seibert Tr 5670 in camera RX01697 in camera)

1516 At the hearing ~

~ (Gilespie Tr 5852 in camera) ~

~ (RX01665 at 001 in camera) ~

~ This Cour finds Gilespies

testimony not to be credible and further finds that Exide has attempted to manipulate this

proceeding to its benefit

PPAB 1631446vl 6

B i )

1517 t

~ (RXOI713 in camera RX01667 in camera Seibert Tr

5665 in camera) ~

~ (RXOI713 at 002

in camera) ~

~ (RXOI713 at 003 Seibert Tr 5657 in camera)

a i )

1518 ~

~ (Seibert Tr 5651-53 5655 in camera

RX01617 in camera)

1519 ~

~ (Seibert Tr 5651-52 5670 in camera) ~

~ (Seibert Tr 5652

in camera) ~ ~ (Seibert Tr 5652

in camera) ~

~ (Seibert Tr 5658 in camera)

1520 t

~ (Seibert Tr 5652-53 in camera) t

PPAB 1631446vl 7

~ (RX01667 at 002 in camera Seibert Tr 5658 in camera) ~

~ (Gilespie Tr 5858 in camera)

1521 ~

~ (RX01667 at 002 Seibert Tr 5670 in camera)

b i )

1522 ~

~ (RXOI668 in camera RX01669 in camera

Seibert Tr 5658-59 5662 in camera) ~

~ (RX01668 at 002 in camera Seibert Tr 5659-60 in camera Gilespie Tr

5839

in camera)

1523 At the same time ~

~ (RXO 1668 at 002

U ~) in camera Seibert

Tr 5734 in camera) ~

PPAB 1631446vl 8

~

1524 Upon learing that ~

~ (Seibert Tr 5660 in camera) t

~ (RX01720 at 035 in camera

Seibert Tr 5660 in camera) ~

~ (Seibert Tr 5660 in camera)

1525 ~

~ (Seibert Tr 5660-61 in camera) ~

~ (Seibert Tr 5661 in camera)

1526 In subsequent discussions ~

~ (Seibert Tr 5662-63 5666 in camera

Toth Tr 5749-50 in camera RX01714 at 002 in camera RX01718 at 002 in camera) In

addition ~

)

(Seibert Tr 5663-65 in camera Toth Tr 5750-51 5760-61 in camera RX01718 at 002 in

camera RX01683 in camera RX01714 at 002 in camera) t

~

PPAB 1631446vl 9

1527 ~

~

(Seibert Tr 5732-34 in camera)

1528 t

~ (Seibert Tr 5645 in camera Gilespie Tr 5851 in camera RX01665 in camera

RX01669 at 002 in camera RX01687 in camera)

c i ) 1529 After the record was closed on June 22 2009 ~

~ (RXOI676

in camera Seibert Tr 5674 in camera Gilespie Tr 5845 in camera) ~

~ (Seibert Tr 5673-74

5676-77 in camera Gilespie Tr 5845-46 in camera RX01676 in camera) t

~ (RXOI676 in camera JX-9 in camera

Gilespie Tr 5839 5843 in camera) Specifically ~

PPAB 1631446vl 10

Date Delivery PO Issued Quantityfeet SQM Date

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

Total ( i

HRX01676 in camera)

1530 t

~ (RX01667 at 001 in camera RX01670 at 001

in camera RX01671 at 001 in camera Seibert Tr 5675-76 in camera Gilespie Tr 5844 in

camera)

1531 ~

~ (Seibert Tr 5673-74 5679 in camera) ~

~ (Gilespie Tr 5842-43 in camera) t

PPAB 1631446vl 11

~ (Gilespie Tr 5843 in camera Toth Tr 5752-53 in camera

RX01686 in camera)

1532 Based on past practice ~

~ (Seibert Tr 5671 in camera JX-9 in camera) In

contrast ~

~

(RXOI676 in camera JX-9 in camera Seibert Tr 5673-74 in camera Gilespie Tr 5839 in

camera)

1533 ~

~ (Seibert Tr 5671 in

camera) ~

~ (Seibert Tr 5672 in camera

RX01723 in camera) ~

~ (Seibert Tr 5673

in camera RXO 1708 (~

~) in camera)

1534 ~

~ (Seibert Tr 5678-79 5709-10 in

camera) t

~ (RXOI698 in

camera Seibert Tr 5672 in camera) ~

PPAB 1631446vl 12

~ (RXOI699 in camera Seibert Tr 5672-73 in camera)

1535 ~

)J (Seibert Tr 5674 in

camera) ~ ~ (Seibert Tr

5683 in camera) ~

~ (Seibert Tr 5682-83 in camera RXO 1724 in camera) ~

~ (RXOI723 in camera Gilespie Tr 5837 in camera)

1536 Moreover ~

~ (Seibert

Tr 5681-82 in camera) In addition ~ ~ (Seibert Tr

5682-83 in camera RX01724 in camera) ~

~ (Gilespie Tr 5849-50 in camera) ~

~ (RXOI724 in camera Seibert Tr 5683 in camera) For example

~

~ (RXOI724

in camera) Similarly ~

~ (RXOI724 in camera) ~

~

PPAB 1631446vl 13

1537 ~

~ (Seibert Tr 5683 in camera) ~

~

(RXOI717 in camera Gilespie Tr 5848-49 in camera Seibert Tr 5683-84 in camera)

Here ~

n (Seibert Tr 5676-77 5732 in camera)

1538 ~

~

(Gilespie 5842-43 in camera)

1539 ~

PPAB 1631446vl 14

~ (Seibert Tr 5680-81

in camera)

1540 ~

~

(Seibert Tr 5677-78 in camera) ~

~ (RXOI693 in camera Seibert Tr 5679-80 in camera) ~

~ (Gilespie Tr 5862 in camera) Yet ~

~ (Gilespie Tr 5846 in camera) ~

~ (Gilespie Tr 5849 in camera) In any event ~

~ (Seibert Tr 5672

in camera)

1541 t

~ (Siebert Tr 5684-85 in camera

Gilespie Tr 5840-41 in camera RX01681 in camera) ~

~ (Gilespie Tr 5840 in

PPAB 1631446vl 15

camera) ~

~ (RXOI681 in camera) ~

~ (Gilespie Tr

5839 in camera) Again Gilespies testimony is not credible

1542 ~

~ (Gilespie Tr 5836-37 in camera) ~

~ (Gilespie Tr 5843 RXOI726)

1543 ~

PPAB 1631446vl 16

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

~

(RX01665 at 003 in camera) ~

J (Gilespie Tr 2934 in

camera) and is further evidence that ~

~ and therefore contrary to Complaint Counsels assertions there are no significant

bariers to entry for battery separators due to testing whether for automotive motive or some

other application or use

1515 ~

~ (Seibert Tr 5670 in camera RX01697 in camera)

1516 At the hearing ~

~ (Gilespie Tr 5852 in camera) ~

~ (RX01665 at 001 in camera) ~

~ This Cour finds Gilespies

testimony not to be credible and further finds that Exide has attempted to manipulate this

proceeding to its benefit

PPAB 1631446vl 6

B i )

1517 t

~ (RXOI713 in camera RX01667 in camera Seibert Tr

5665 in camera) ~

~ (RXOI713 at 002

in camera) ~

~ (RXOI713 at 003 Seibert Tr 5657 in camera)

a i )

1518 ~

~ (Seibert Tr 5651-53 5655 in camera

RX01617 in camera)

1519 ~

~ (Seibert Tr 5651-52 5670 in camera) ~

~ (Seibert Tr 5652

in camera) ~ ~ (Seibert Tr 5652

in camera) ~

~ (Seibert Tr 5658 in camera)

1520 t

~ (Seibert Tr 5652-53 in camera) t

PPAB 1631446vl 7

~ (RX01667 at 002 in camera Seibert Tr 5658 in camera) ~

~ (Gilespie Tr 5858 in camera)

1521 ~

~ (RX01667 at 002 Seibert Tr 5670 in camera)

b i )

1522 ~

~ (RXOI668 in camera RX01669 in camera

Seibert Tr 5658-59 5662 in camera) ~

~ (RX01668 at 002 in camera Seibert Tr 5659-60 in camera Gilespie Tr

5839

in camera)

1523 At the same time ~

~ (RXO 1668 at 002

U ~) in camera Seibert

Tr 5734 in camera) ~

PPAB 1631446vl 8

~

1524 Upon learing that ~

~ (Seibert Tr 5660 in camera) t

~ (RX01720 at 035 in camera

Seibert Tr 5660 in camera) ~

~ (Seibert Tr 5660 in camera)

1525 ~

~ (Seibert Tr 5660-61 in camera) ~

~ (Seibert Tr 5661 in camera)

1526 In subsequent discussions ~

~ (Seibert Tr 5662-63 5666 in camera

Toth Tr 5749-50 in camera RX01714 at 002 in camera RX01718 at 002 in camera) In

addition ~

)

(Seibert Tr 5663-65 in camera Toth Tr 5750-51 5760-61 in camera RX01718 at 002 in

camera RX01683 in camera RX01714 at 002 in camera) t

~

PPAB 1631446vl 9

1527 ~

~

(Seibert Tr 5732-34 in camera)

1528 t

~ (Seibert Tr 5645 in camera Gilespie Tr 5851 in camera RX01665 in camera

RX01669 at 002 in camera RX01687 in camera)

c i ) 1529 After the record was closed on June 22 2009 ~

~ (RXOI676

in camera Seibert Tr 5674 in camera Gilespie Tr 5845 in camera) ~

~ (Seibert Tr 5673-74

5676-77 in camera Gilespie Tr 5845-46 in camera RX01676 in camera) t

~ (RXOI676 in camera JX-9 in camera

Gilespie Tr 5839 5843 in camera) Specifically ~

PPAB 1631446vl 10

Date Delivery PO Issued Quantityfeet SQM Date

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

Total ( i

HRX01676 in camera)

1530 t

~ (RX01667 at 001 in camera RX01670 at 001

in camera RX01671 at 001 in camera Seibert Tr 5675-76 in camera Gilespie Tr 5844 in

camera)

1531 ~

~ (Seibert Tr 5673-74 5679 in camera) ~

~ (Gilespie Tr 5842-43 in camera) t

PPAB 1631446vl 11

~ (Gilespie Tr 5843 in camera Toth Tr 5752-53 in camera

RX01686 in camera)

1532 Based on past practice ~

~ (Seibert Tr 5671 in camera JX-9 in camera) In

contrast ~

~

(RXOI676 in camera JX-9 in camera Seibert Tr 5673-74 in camera Gilespie Tr 5839 in

camera)

1533 ~

~ (Seibert Tr 5671 in

camera) ~

~ (Seibert Tr 5672 in camera

RX01723 in camera) ~

~ (Seibert Tr 5673

in camera RXO 1708 (~

~) in camera)

1534 ~

~ (Seibert Tr 5678-79 5709-10 in

camera) t

~ (RXOI698 in

camera Seibert Tr 5672 in camera) ~

PPAB 1631446vl 12

~ (RXOI699 in camera Seibert Tr 5672-73 in camera)

1535 ~

)J (Seibert Tr 5674 in

camera) ~ ~ (Seibert Tr

5683 in camera) ~

~ (Seibert Tr 5682-83 in camera RXO 1724 in camera) ~

~ (RXOI723 in camera Gilespie Tr 5837 in camera)

1536 Moreover ~

~ (Seibert

Tr 5681-82 in camera) In addition ~ ~ (Seibert Tr

5682-83 in camera RX01724 in camera) ~

~ (Gilespie Tr 5849-50 in camera) ~

~ (RXOI724 in camera Seibert Tr 5683 in camera) For example

~

~ (RXOI724

in camera) Similarly ~

~ (RXOI724 in camera) ~

~

PPAB 1631446vl 13

1537 ~

~ (Seibert Tr 5683 in camera) ~

~

(RXOI717 in camera Gilespie Tr 5848-49 in camera Seibert Tr 5683-84 in camera)

Here ~

n (Seibert Tr 5676-77 5732 in camera)

1538 ~

~

(Gilespie 5842-43 in camera)

1539 ~

PPAB 1631446vl 14

~ (Seibert Tr 5680-81

in camera)

1540 ~

~

(Seibert Tr 5677-78 in camera) ~

~ (RXOI693 in camera Seibert Tr 5679-80 in camera) ~

~ (Gilespie Tr 5862 in camera) Yet ~

~ (Gilespie Tr 5846 in camera) ~

~ (Gilespie Tr 5849 in camera) In any event ~

~ (Seibert Tr 5672

in camera)

1541 t

~ (Siebert Tr 5684-85 in camera

Gilespie Tr 5840-41 in camera RX01681 in camera) ~

~ (Gilespie Tr 5840 in

PPAB 1631446vl 15

camera) ~

~ (RXOI681 in camera) ~

~ (Gilespie Tr

5839 in camera) Again Gilespies testimony is not credible

1542 ~

~ (Gilespie Tr 5836-37 in camera) ~

~ (Gilespie Tr 5843 RXOI726)

1543 ~

PPAB 1631446vl 16

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

B i )

1517 t

~ (RXOI713 in camera RX01667 in camera Seibert Tr

5665 in camera) ~

~ (RXOI713 at 002

in camera) ~

~ (RXOI713 at 003 Seibert Tr 5657 in camera)

a i )

1518 ~

~ (Seibert Tr 5651-53 5655 in camera

RX01617 in camera)

1519 ~

~ (Seibert Tr 5651-52 5670 in camera) ~

~ (Seibert Tr 5652

in camera) ~ ~ (Seibert Tr 5652

in camera) ~

~ (Seibert Tr 5658 in camera)

1520 t

~ (Seibert Tr 5652-53 in camera) t

PPAB 1631446vl 7

~ (RX01667 at 002 in camera Seibert Tr 5658 in camera) ~

~ (Gilespie Tr 5858 in camera)

1521 ~

~ (RX01667 at 002 Seibert Tr 5670 in camera)

b i )

1522 ~

~ (RXOI668 in camera RX01669 in camera

Seibert Tr 5658-59 5662 in camera) ~

~ (RX01668 at 002 in camera Seibert Tr 5659-60 in camera Gilespie Tr

5839

in camera)

1523 At the same time ~

~ (RXO 1668 at 002

U ~) in camera Seibert

Tr 5734 in camera) ~

PPAB 1631446vl 8

~

1524 Upon learing that ~

~ (Seibert Tr 5660 in camera) t

~ (RX01720 at 035 in camera

Seibert Tr 5660 in camera) ~

~ (Seibert Tr 5660 in camera)

1525 ~

~ (Seibert Tr 5660-61 in camera) ~

~ (Seibert Tr 5661 in camera)

1526 In subsequent discussions ~

~ (Seibert Tr 5662-63 5666 in camera

Toth Tr 5749-50 in camera RX01714 at 002 in camera RX01718 at 002 in camera) In

addition ~

)

(Seibert Tr 5663-65 in camera Toth Tr 5750-51 5760-61 in camera RX01718 at 002 in

camera RX01683 in camera RX01714 at 002 in camera) t

~

PPAB 1631446vl 9

1527 ~

~

(Seibert Tr 5732-34 in camera)

1528 t

~ (Seibert Tr 5645 in camera Gilespie Tr 5851 in camera RX01665 in camera

RX01669 at 002 in camera RX01687 in camera)

c i ) 1529 After the record was closed on June 22 2009 ~

~ (RXOI676

in camera Seibert Tr 5674 in camera Gilespie Tr 5845 in camera) ~

~ (Seibert Tr 5673-74

5676-77 in camera Gilespie Tr 5845-46 in camera RX01676 in camera) t

~ (RXOI676 in camera JX-9 in camera

Gilespie Tr 5839 5843 in camera) Specifically ~

PPAB 1631446vl 10

Date Delivery PO Issued Quantityfeet SQM Date

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

Total ( i

HRX01676 in camera)

1530 t

~ (RX01667 at 001 in camera RX01670 at 001

in camera RX01671 at 001 in camera Seibert Tr 5675-76 in camera Gilespie Tr 5844 in

camera)

1531 ~

~ (Seibert Tr 5673-74 5679 in camera) ~

~ (Gilespie Tr 5842-43 in camera) t

PPAB 1631446vl 11

~ (Gilespie Tr 5843 in camera Toth Tr 5752-53 in camera

RX01686 in camera)

1532 Based on past practice ~

~ (Seibert Tr 5671 in camera JX-9 in camera) In

contrast ~

~

(RXOI676 in camera JX-9 in camera Seibert Tr 5673-74 in camera Gilespie Tr 5839 in

camera)

1533 ~

~ (Seibert Tr 5671 in

camera) ~

~ (Seibert Tr 5672 in camera

RX01723 in camera) ~

~ (Seibert Tr 5673

in camera RXO 1708 (~

~) in camera)

1534 ~

~ (Seibert Tr 5678-79 5709-10 in

camera) t

~ (RXOI698 in

camera Seibert Tr 5672 in camera) ~

PPAB 1631446vl 12

~ (RXOI699 in camera Seibert Tr 5672-73 in camera)

1535 ~

)J (Seibert Tr 5674 in

camera) ~ ~ (Seibert Tr

5683 in camera) ~

~ (Seibert Tr 5682-83 in camera RXO 1724 in camera) ~

~ (RXOI723 in camera Gilespie Tr 5837 in camera)

1536 Moreover ~

~ (Seibert

Tr 5681-82 in camera) In addition ~ ~ (Seibert Tr

5682-83 in camera RX01724 in camera) ~

~ (Gilespie Tr 5849-50 in camera) ~

~ (RXOI724 in camera Seibert Tr 5683 in camera) For example

~

~ (RXOI724

in camera) Similarly ~

~ (RXOI724 in camera) ~

~

PPAB 1631446vl 13

1537 ~

~ (Seibert Tr 5683 in camera) ~

~

(RXOI717 in camera Gilespie Tr 5848-49 in camera Seibert Tr 5683-84 in camera)

Here ~

n (Seibert Tr 5676-77 5732 in camera)

1538 ~

~

(Gilespie 5842-43 in camera)

1539 ~

PPAB 1631446vl 14

~ (Seibert Tr 5680-81

in camera)

1540 ~

~

(Seibert Tr 5677-78 in camera) ~

~ (RXOI693 in camera Seibert Tr 5679-80 in camera) ~

~ (Gilespie Tr 5862 in camera) Yet ~

~ (Gilespie Tr 5846 in camera) ~

~ (Gilespie Tr 5849 in camera) In any event ~

~ (Seibert Tr 5672

in camera)

1541 t

~ (Siebert Tr 5684-85 in camera

Gilespie Tr 5840-41 in camera RX01681 in camera) ~

~ (Gilespie Tr 5840 in

PPAB 1631446vl 15

camera) ~

~ (RXOI681 in camera) ~

~ (Gilespie Tr

5839 in camera) Again Gilespies testimony is not credible

1542 ~

~ (Gilespie Tr 5836-37 in camera) ~

~ (Gilespie Tr 5843 RXOI726)

1543 ~

PPAB 1631446vl 16

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

~ (RX01667 at 002 in camera Seibert Tr 5658 in camera) ~

~ (Gilespie Tr 5858 in camera)

1521 ~

~ (RX01667 at 002 Seibert Tr 5670 in camera)

b i )

1522 ~

~ (RXOI668 in camera RX01669 in camera

Seibert Tr 5658-59 5662 in camera) ~

~ (RX01668 at 002 in camera Seibert Tr 5659-60 in camera Gilespie Tr

5839

in camera)

1523 At the same time ~

~ (RXO 1668 at 002

U ~) in camera Seibert

Tr 5734 in camera) ~

PPAB 1631446vl 8

~

1524 Upon learing that ~

~ (Seibert Tr 5660 in camera) t

~ (RX01720 at 035 in camera

Seibert Tr 5660 in camera) ~

~ (Seibert Tr 5660 in camera)

1525 ~

~ (Seibert Tr 5660-61 in camera) ~

~ (Seibert Tr 5661 in camera)

1526 In subsequent discussions ~

~ (Seibert Tr 5662-63 5666 in camera

Toth Tr 5749-50 in camera RX01714 at 002 in camera RX01718 at 002 in camera) In

addition ~

)

(Seibert Tr 5663-65 in camera Toth Tr 5750-51 5760-61 in camera RX01718 at 002 in

camera RX01683 in camera RX01714 at 002 in camera) t

~

PPAB 1631446vl 9

1527 ~

~

(Seibert Tr 5732-34 in camera)

1528 t

~ (Seibert Tr 5645 in camera Gilespie Tr 5851 in camera RX01665 in camera

RX01669 at 002 in camera RX01687 in camera)

c i ) 1529 After the record was closed on June 22 2009 ~

~ (RXOI676

in camera Seibert Tr 5674 in camera Gilespie Tr 5845 in camera) ~

~ (Seibert Tr 5673-74

5676-77 in camera Gilespie Tr 5845-46 in camera RX01676 in camera) t

~ (RXOI676 in camera JX-9 in camera

Gilespie Tr 5839 5843 in camera) Specifically ~

PPAB 1631446vl 10

Date Delivery PO Issued Quantityfeet SQM Date

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

Total ( i

HRX01676 in camera)

1530 t

~ (RX01667 at 001 in camera RX01670 at 001

in camera RX01671 at 001 in camera Seibert Tr 5675-76 in camera Gilespie Tr 5844 in

camera)

1531 ~

~ (Seibert Tr 5673-74 5679 in camera) ~

~ (Gilespie Tr 5842-43 in camera) t

PPAB 1631446vl 11

~ (Gilespie Tr 5843 in camera Toth Tr 5752-53 in camera

RX01686 in camera)

1532 Based on past practice ~

~ (Seibert Tr 5671 in camera JX-9 in camera) In

contrast ~

~

(RXOI676 in camera JX-9 in camera Seibert Tr 5673-74 in camera Gilespie Tr 5839 in

camera)

1533 ~

~ (Seibert Tr 5671 in

camera) ~

~ (Seibert Tr 5672 in camera

RX01723 in camera) ~

~ (Seibert Tr 5673

in camera RXO 1708 (~

~) in camera)

1534 ~

~ (Seibert Tr 5678-79 5709-10 in

camera) t

~ (RXOI698 in

camera Seibert Tr 5672 in camera) ~

PPAB 1631446vl 12

~ (RXOI699 in camera Seibert Tr 5672-73 in camera)

1535 ~

)J (Seibert Tr 5674 in

camera) ~ ~ (Seibert Tr

5683 in camera) ~

~ (Seibert Tr 5682-83 in camera RXO 1724 in camera) ~

~ (RXOI723 in camera Gilespie Tr 5837 in camera)

1536 Moreover ~

~ (Seibert

Tr 5681-82 in camera) In addition ~ ~ (Seibert Tr

5682-83 in camera RX01724 in camera) ~

~ (Gilespie Tr 5849-50 in camera) ~

~ (RXOI724 in camera Seibert Tr 5683 in camera) For example

~

~ (RXOI724

in camera) Similarly ~

~ (RXOI724 in camera) ~

~

PPAB 1631446vl 13

1537 ~

~ (Seibert Tr 5683 in camera) ~

~

(RXOI717 in camera Gilespie Tr 5848-49 in camera Seibert Tr 5683-84 in camera)

Here ~

n (Seibert Tr 5676-77 5732 in camera)

1538 ~

~

(Gilespie 5842-43 in camera)

1539 ~

PPAB 1631446vl 14

~ (Seibert Tr 5680-81

in camera)

1540 ~

~

(Seibert Tr 5677-78 in camera) ~

~ (RXOI693 in camera Seibert Tr 5679-80 in camera) ~

~ (Gilespie Tr 5862 in camera) Yet ~

~ (Gilespie Tr 5846 in camera) ~

~ (Gilespie Tr 5849 in camera) In any event ~

~ (Seibert Tr 5672

in camera)

1541 t

~ (Siebert Tr 5684-85 in camera

Gilespie Tr 5840-41 in camera RX01681 in camera) ~

~ (Gilespie Tr 5840 in

PPAB 1631446vl 15

camera) ~

~ (RXOI681 in camera) ~

~ (Gilespie Tr

5839 in camera) Again Gilespies testimony is not credible

1542 ~

~ (Gilespie Tr 5836-37 in camera) ~

~ (Gilespie Tr 5843 RXOI726)

1543 ~

PPAB 1631446vl 16

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

~

1524 Upon learing that ~

~ (Seibert Tr 5660 in camera) t

~ (RX01720 at 035 in camera

Seibert Tr 5660 in camera) ~

~ (Seibert Tr 5660 in camera)

1525 ~

~ (Seibert Tr 5660-61 in camera) ~

~ (Seibert Tr 5661 in camera)

1526 In subsequent discussions ~

~ (Seibert Tr 5662-63 5666 in camera

Toth Tr 5749-50 in camera RX01714 at 002 in camera RX01718 at 002 in camera) In

addition ~

)

(Seibert Tr 5663-65 in camera Toth Tr 5750-51 5760-61 in camera RX01718 at 002 in

camera RX01683 in camera RX01714 at 002 in camera) t

~

PPAB 1631446vl 9

1527 ~

~

(Seibert Tr 5732-34 in camera)

1528 t

~ (Seibert Tr 5645 in camera Gilespie Tr 5851 in camera RX01665 in camera

RX01669 at 002 in camera RX01687 in camera)

c i ) 1529 After the record was closed on June 22 2009 ~

~ (RXOI676

in camera Seibert Tr 5674 in camera Gilespie Tr 5845 in camera) ~

~ (Seibert Tr 5673-74

5676-77 in camera Gilespie Tr 5845-46 in camera RX01676 in camera) t

~ (RXOI676 in camera JX-9 in camera

Gilespie Tr 5839 5843 in camera) Specifically ~

PPAB 1631446vl 10

Date Delivery PO Issued Quantityfeet SQM Date

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

Total ( i

HRX01676 in camera)

1530 t

~ (RX01667 at 001 in camera RX01670 at 001

in camera RX01671 at 001 in camera Seibert Tr 5675-76 in camera Gilespie Tr 5844 in

camera)

1531 ~

~ (Seibert Tr 5673-74 5679 in camera) ~

~ (Gilespie Tr 5842-43 in camera) t

PPAB 1631446vl 11

~ (Gilespie Tr 5843 in camera Toth Tr 5752-53 in camera

RX01686 in camera)

1532 Based on past practice ~

~ (Seibert Tr 5671 in camera JX-9 in camera) In

contrast ~

~

(RXOI676 in camera JX-9 in camera Seibert Tr 5673-74 in camera Gilespie Tr 5839 in

camera)

1533 ~

~ (Seibert Tr 5671 in

camera) ~

~ (Seibert Tr 5672 in camera

RX01723 in camera) ~

~ (Seibert Tr 5673

in camera RXO 1708 (~

~) in camera)

1534 ~

~ (Seibert Tr 5678-79 5709-10 in

camera) t

~ (RXOI698 in

camera Seibert Tr 5672 in camera) ~

PPAB 1631446vl 12

~ (RXOI699 in camera Seibert Tr 5672-73 in camera)

1535 ~

)J (Seibert Tr 5674 in

camera) ~ ~ (Seibert Tr

5683 in camera) ~

~ (Seibert Tr 5682-83 in camera RXO 1724 in camera) ~

~ (RXOI723 in camera Gilespie Tr 5837 in camera)

1536 Moreover ~

~ (Seibert

Tr 5681-82 in camera) In addition ~ ~ (Seibert Tr

5682-83 in camera RX01724 in camera) ~

~ (Gilespie Tr 5849-50 in camera) ~

~ (RXOI724 in camera Seibert Tr 5683 in camera) For example

~

~ (RXOI724

in camera) Similarly ~

~ (RXOI724 in camera) ~

~

PPAB 1631446vl 13

1537 ~

~ (Seibert Tr 5683 in camera) ~

~

(RXOI717 in camera Gilespie Tr 5848-49 in camera Seibert Tr 5683-84 in camera)

Here ~

n (Seibert Tr 5676-77 5732 in camera)

1538 ~

~

(Gilespie 5842-43 in camera)

1539 ~

PPAB 1631446vl 14

~ (Seibert Tr 5680-81

in camera)

1540 ~

~

(Seibert Tr 5677-78 in camera) ~

~ (RXOI693 in camera Seibert Tr 5679-80 in camera) ~

~ (Gilespie Tr 5862 in camera) Yet ~

~ (Gilespie Tr 5846 in camera) ~

~ (Gilespie Tr 5849 in camera) In any event ~

~ (Seibert Tr 5672

in camera)

1541 t

~ (Siebert Tr 5684-85 in camera

Gilespie Tr 5840-41 in camera RX01681 in camera) ~

~ (Gilespie Tr 5840 in

PPAB 1631446vl 15

camera) ~

~ (RXOI681 in camera) ~

~ (Gilespie Tr

5839 in camera) Again Gilespies testimony is not credible

1542 ~

~ (Gilespie Tr 5836-37 in camera) ~

~ (Gilespie Tr 5843 RXOI726)

1543 ~

PPAB 1631446vl 16

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

1527 ~

~

(Seibert Tr 5732-34 in camera)

1528 t

~ (Seibert Tr 5645 in camera Gilespie Tr 5851 in camera RX01665 in camera

RX01669 at 002 in camera RX01687 in camera)

c i ) 1529 After the record was closed on June 22 2009 ~

~ (RXOI676

in camera Seibert Tr 5674 in camera Gilespie Tr 5845 in camera) ~

~ (Seibert Tr 5673-74

5676-77 in camera Gilespie Tr 5845-46 in camera RX01676 in camera) t

~ (RXOI676 in camera JX-9 in camera

Gilespie Tr 5839 5843 in camera) Specifically ~

PPAB 1631446vl 10

Date Delivery PO Issued Quantityfeet SQM Date

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

Total ( i

HRX01676 in camera)

1530 t

~ (RX01667 at 001 in camera RX01670 at 001

in camera RX01671 at 001 in camera Seibert Tr 5675-76 in camera Gilespie Tr 5844 in

camera)

1531 ~

~ (Seibert Tr 5673-74 5679 in camera) ~

~ (Gilespie Tr 5842-43 in camera) t

PPAB 1631446vl 11

~ (Gilespie Tr 5843 in camera Toth Tr 5752-53 in camera

RX01686 in camera)

1532 Based on past practice ~

~ (Seibert Tr 5671 in camera JX-9 in camera) In

contrast ~

~

(RXOI676 in camera JX-9 in camera Seibert Tr 5673-74 in camera Gilespie Tr 5839 in

camera)

1533 ~

~ (Seibert Tr 5671 in

camera) ~

~ (Seibert Tr 5672 in camera

RX01723 in camera) ~

~ (Seibert Tr 5673

in camera RXO 1708 (~

~) in camera)

1534 ~

~ (Seibert Tr 5678-79 5709-10 in

camera) t

~ (RXOI698 in

camera Seibert Tr 5672 in camera) ~

PPAB 1631446vl 12

~ (RXOI699 in camera Seibert Tr 5672-73 in camera)

1535 ~

)J (Seibert Tr 5674 in

camera) ~ ~ (Seibert Tr

5683 in camera) ~

~ (Seibert Tr 5682-83 in camera RXO 1724 in camera) ~

~ (RXOI723 in camera Gilespie Tr 5837 in camera)

1536 Moreover ~

~ (Seibert

Tr 5681-82 in camera) In addition ~ ~ (Seibert Tr

5682-83 in camera RX01724 in camera) ~

~ (Gilespie Tr 5849-50 in camera) ~

~ (RXOI724 in camera Seibert Tr 5683 in camera) For example

~

~ (RXOI724

in camera) Similarly ~

~ (RXOI724 in camera) ~

~

PPAB 1631446vl 13

1537 ~

~ (Seibert Tr 5683 in camera) ~

~

(RXOI717 in camera Gilespie Tr 5848-49 in camera Seibert Tr 5683-84 in camera)

Here ~

n (Seibert Tr 5676-77 5732 in camera)

1538 ~

~

(Gilespie 5842-43 in camera)

1539 ~

PPAB 1631446vl 14

~ (Seibert Tr 5680-81

in camera)

1540 ~

~

(Seibert Tr 5677-78 in camera) ~

~ (RXOI693 in camera Seibert Tr 5679-80 in camera) ~

~ (Gilespie Tr 5862 in camera) Yet ~

~ (Gilespie Tr 5846 in camera) ~

~ (Gilespie Tr 5849 in camera) In any event ~

~ (Seibert Tr 5672

in camera)

1541 t

~ (Siebert Tr 5684-85 in camera

Gilespie Tr 5840-41 in camera RX01681 in camera) ~

~ (Gilespie Tr 5840 in

PPAB 1631446vl 15

camera) ~

~ (RXOI681 in camera) ~

~ (Gilespie Tr

5839 in camera) Again Gilespies testimony is not credible

1542 ~

~ (Gilespie Tr 5836-37 in camera) ~

~ (Gilespie Tr 5843 RXOI726)

1543 ~

PPAB 1631446vl 16

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

Date Delivery PO Issued Quantityfeet SQM Date

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

(

Total ( i

HRX01676 in camera)

1530 t

~ (RX01667 at 001 in camera RX01670 at 001

in camera RX01671 at 001 in camera Seibert Tr 5675-76 in camera Gilespie Tr 5844 in

camera)

1531 ~

~ (Seibert Tr 5673-74 5679 in camera) ~

~ (Gilespie Tr 5842-43 in camera) t

PPAB 1631446vl 11

~ (Gilespie Tr 5843 in camera Toth Tr 5752-53 in camera

RX01686 in camera)

1532 Based on past practice ~

~ (Seibert Tr 5671 in camera JX-9 in camera) In

contrast ~

~

(RXOI676 in camera JX-9 in camera Seibert Tr 5673-74 in camera Gilespie Tr 5839 in

camera)

1533 ~

~ (Seibert Tr 5671 in

camera) ~

~ (Seibert Tr 5672 in camera

RX01723 in camera) ~

~ (Seibert Tr 5673

in camera RXO 1708 (~

~) in camera)

1534 ~

~ (Seibert Tr 5678-79 5709-10 in

camera) t

~ (RXOI698 in

camera Seibert Tr 5672 in camera) ~

PPAB 1631446vl 12

~ (RXOI699 in camera Seibert Tr 5672-73 in camera)

1535 ~

)J (Seibert Tr 5674 in

camera) ~ ~ (Seibert Tr

5683 in camera) ~

~ (Seibert Tr 5682-83 in camera RXO 1724 in camera) ~

~ (RXOI723 in camera Gilespie Tr 5837 in camera)

1536 Moreover ~

~ (Seibert

Tr 5681-82 in camera) In addition ~ ~ (Seibert Tr

5682-83 in camera RX01724 in camera) ~

~ (Gilespie Tr 5849-50 in camera) ~

~ (RXOI724 in camera Seibert Tr 5683 in camera) For example

~

~ (RXOI724

in camera) Similarly ~

~ (RXOI724 in camera) ~

~

PPAB 1631446vl 13

1537 ~

~ (Seibert Tr 5683 in camera) ~

~

(RXOI717 in camera Gilespie Tr 5848-49 in camera Seibert Tr 5683-84 in camera)

Here ~

n (Seibert Tr 5676-77 5732 in camera)

1538 ~

~

(Gilespie 5842-43 in camera)

1539 ~

PPAB 1631446vl 14

~ (Seibert Tr 5680-81

in camera)

1540 ~

~

(Seibert Tr 5677-78 in camera) ~

~ (RXOI693 in camera Seibert Tr 5679-80 in camera) ~

~ (Gilespie Tr 5862 in camera) Yet ~

~ (Gilespie Tr 5846 in camera) ~

~ (Gilespie Tr 5849 in camera) In any event ~

~ (Seibert Tr 5672

in camera)

1541 t

~ (Siebert Tr 5684-85 in camera

Gilespie Tr 5840-41 in camera RX01681 in camera) ~

~ (Gilespie Tr 5840 in

PPAB 1631446vl 15

camera) ~

~ (RXOI681 in camera) ~

~ (Gilespie Tr

5839 in camera) Again Gilespies testimony is not credible

1542 ~

~ (Gilespie Tr 5836-37 in camera) ~

~ (Gilespie Tr 5843 RXOI726)

1543 ~

PPAB 1631446vl 16

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

~ (Gilespie Tr 5843 in camera Toth Tr 5752-53 in camera

RX01686 in camera)

1532 Based on past practice ~

~ (Seibert Tr 5671 in camera JX-9 in camera) In

contrast ~

~

(RXOI676 in camera JX-9 in camera Seibert Tr 5673-74 in camera Gilespie Tr 5839 in

camera)

1533 ~

~ (Seibert Tr 5671 in

camera) ~

~ (Seibert Tr 5672 in camera

RX01723 in camera) ~

~ (Seibert Tr 5673

in camera RXO 1708 (~

~) in camera)

1534 ~

~ (Seibert Tr 5678-79 5709-10 in

camera) t

~ (RXOI698 in

camera Seibert Tr 5672 in camera) ~

PPAB 1631446vl 12

~ (RXOI699 in camera Seibert Tr 5672-73 in camera)

1535 ~

)J (Seibert Tr 5674 in

camera) ~ ~ (Seibert Tr

5683 in camera) ~

~ (Seibert Tr 5682-83 in camera RXO 1724 in camera) ~

~ (RXOI723 in camera Gilespie Tr 5837 in camera)

1536 Moreover ~

~ (Seibert

Tr 5681-82 in camera) In addition ~ ~ (Seibert Tr

5682-83 in camera RX01724 in camera) ~

~ (Gilespie Tr 5849-50 in camera) ~

~ (RXOI724 in camera Seibert Tr 5683 in camera) For example

~

~ (RXOI724

in camera) Similarly ~

~ (RXOI724 in camera) ~

~

PPAB 1631446vl 13

1537 ~

~ (Seibert Tr 5683 in camera) ~

~

(RXOI717 in camera Gilespie Tr 5848-49 in camera Seibert Tr 5683-84 in camera)

Here ~

n (Seibert Tr 5676-77 5732 in camera)

1538 ~

~

(Gilespie 5842-43 in camera)

1539 ~

PPAB 1631446vl 14

~ (Seibert Tr 5680-81

in camera)

1540 ~

~

(Seibert Tr 5677-78 in camera) ~

~ (RXOI693 in camera Seibert Tr 5679-80 in camera) ~

~ (Gilespie Tr 5862 in camera) Yet ~

~ (Gilespie Tr 5846 in camera) ~

~ (Gilespie Tr 5849 in camera) In any event ~

~ (Seibert Tr 5672

in camera)

1541 t

~ (Siebert Tr 5684-85 in camera

Gilespie Tr 5840-41 in camera RX01681 in camera) ~

~ (Gilespie Tr 5840 in

PPAB 1631446vl 15

camera) ~

~ (RXOI681 in camera) ~

~ (Gilespie Tr

5839 in camera) Again Gilespies testimony is not credible

1542 ~

~ (Gilespie Tr 5836-37 in camera) ~

~ (Gilespie Tr 5843 RXOI726)

1543 ~

PPAB 1631446vl 16

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

~ (RXOI699 in camera Seibert Tr 5672-73 in camera)

1535 ~

)J (Seibert Tr 5674 in

camera) ~ ~ (Seibert Tr

5683 in camera) ~

~ (Seibert Tr 5682-83 in camera RXO 1724 in camera) ~

~ (RXOI723 in camera Gilespie Tr 5837 in camera)

1536 Moreover ~

~ (Seibert

Tr 5681-82 in camera) In addition ~ ~ (Seibert Tr

5682-83 in camera RX01724 in camera) ~

~ (Gilespie Tr 5849-50 in camera) ~

~ (RXOI724 in camera Seibert Tr 5683 in camera) For example

~

~ (RXOI724

in camera) Similarly ~

~ (RXOI724 in camera) ~

~

PPAB 1631446vl 13

1537 ~

~ (Seibert Tr 5683 in camera) ~

~

(RXOI717 in camera Gilespie Tr 5848-49 in camera Seibert Tr 5683-84 in camera)

Here ~

n (Seibert Tr 5676-77 5732 in camera)

1538 ~

~

(Gilespie 5842-43 in camera)

1539 ~

PPAB 1631446vl 14

~ (Seibert Tr 5680-81

in camera)

1540 ~

~

(Seibert Tr 5677-78 in camera) ~

~ (RXOI693 in camera Seibert Tr 5679-80 in camera) ~

~ (Gilespie Tr 5862 in camera) Yet ~

~ (Gilespie Tr 5846 in camera) ~

~ (Gilespie Tr 5849 in camera) In any event ~

~ (Seibert Tr 5672

in camera)

1541 t

~ (Siebert Tr 5684-85 in camera

Gilespie Tr 5840-41 in camera RX01681 in camera) ~

~ (Gilespie Tr 5840 in

PPAB 1631446vl 15

camera) ~

~ (RXOI681 in camera) ~

~ (Gilespie Tr

5839 in camera) Again Gilespies testimony is not credible

1542 ~

~ (Gilespie Tr 5836-37 in camera) ~

~ (Gilespie Tr 5843 RXOI726)

1543 ~

PPAB 1631446vl 16

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

1537 ~

~ (Seibert Tr 5683 in camera) ~

~

(RXOI717 in camera Gilespie Tr 5848-49 in camera Seibert Tr 5683-84 in camera)

Here ~

n (Seibert Tr 5676-77 5732 in camera)

1538 ~

~

(Gilespie 5842-43 in camera)

1539 ~

PPAB 1631446vl 14

~ (Seibert Tr 5680-81

in camera)

1540 ~

~

(Seibert Tr 5677-78 in camera) ~

~ (RXOI693 in camera Seibert Tr 5679-80 in camera) ~

~ (Gilespie Tr 5862 in camera) Yet ~

~ (Gilespie Tr 5846 in camera) ~

~ (Gilespie Tr 5849 in camera) In any event ~

~ (Seibert Tr 5672

in camera)

1541 t

~ (Siebert Tr 5684-85 in camera

Gilespie Tr 5840-41 in camera RX01681 in camera) ~

~ (Gilespie Tr 5840 in

PPAB 1631446vl 15

camera) ~

~ (RXOI681 in camera) ~

~ (Gilespie Tr

5839 in camera) Again Gilespies testimony is not credible

1542 ~

~ (Gilespie Tr 5836-37 in camera) ~

~ (Gilespie Tr 5843 RXOI726)

1543 ~

PPAB 1631446vl 16

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

~ (Seibert Tr 5680-81

in camera)

1540 ~

~

(Seibert Tr 5677-78 in camera) ~

~ (RXOI693 in camera Seibert Tr 5679-80 in camera) ~

~ (Gilespie Tr 5862 in camera) Yet ~

~ (Gilespie Tr 5846 in camera) ~

~ (Gilespie Tr 5849 in camera) In any event ~

~ (Seibert Tr 5672

in camera)

1541 t

~ (Siebert Tr 5684-85 in camera

Gilespie Tr 5840-41 in camera RX01681 in camera) ~

~ (Gilespie Tr 5840 in

PPAB 1631446vl 15

camera) ~

~ (RXOI681 in camera) ~

~ (Gilespie Tr

5839 in camera) Again Gilespies testimony is not credible

1542 ~

~ (Gilespie Tr 5836-37 in camera) ~

~ (Gilespie Tr 5843 RXOI726)

1543 ~

PPAB 1631446vl 16

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

camera) ~

~ (RXOI681 in camera) ~

~ (Gilespie Tr

5839 in camera) Again Gilespies testimony is not credible

1542 ~

~ (Gilespie Tr 5836-37 in camera) ~

~ (Gilespie Tr 5843 RXOI726)

1543 ~

PPAB 1631446vl 16

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

~

1544 ~

~ (RXOI679 in camera RX01693 in

camera)

1545 ~

~ (RX01720 at 005 in

camera)

1546 ~

~ (RXOI693 in camera

RX01680 in camera RX01685 in camera Seibert Tr 5681 5684 in camera) ~

~ (Seibert Tr 5734-35 in camera)

Furher the Cour finds that ~

~

1547 t

~ (Seibert Tr 5684570757155723 in camera RX01685 in

PPAB 1631446vl 17

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

camera) ~

~ (Seibert Tr 5681 5722 in camera)

1548 ~

~ (Gilespie Tr 5807 5843-44 in

camera) Gilespies testimony here and elsewhere is not credible According to Exides

second quarter results Exides sales of transportation and industrial batteries are down 29 and

26 respectively (Gilespie Tr 5843-44 RXOI726) Moreover Exides free cash has

declined 129 from last year which Gilespie does not dispute (Gilespie Tr 5844) ~

~ (Gilespie Tr 5862 in

camera) This Court does not find Gilespie to be a credible witness

D i )

1549 t

~ (RXOI704 in camera Gilespie Tr 5838 in

camera) ~

~ (Gilespie Tr 5838 in camera)

~

~ (Toth Tr 5750-51 in

camera RX01704 in camera) t

PPAB 1631446vl 18

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

~ (Gilespie Tr 5838-39 in camera) Accordingly t

~

1550 Previously Respondent provided evidence demonstrating that even In Complaint

Counsels SLI market in North America ~ ~

(RFOF 927) ~

~ (RXOI668 in

camera) t

~

1551 t

~

1552 Similarly ~

~ (RXO 1687 at 002 in

camera) ~

~

PPAB 1631446vl 19

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

1553 Based on the foregoing including specifically ~

E i ) ~

1554 Respondents Chief Executive Officer Robert Toth (Toth) testified at the hearing on

November 12 2009 Toths testimony went uncontradicted by Complaint CounseL This Cour

finds Toth to be a credible witness and credits his testimony in this hearing

1555 ~

~ (Toth Tr 5737-38 5776 in camera)

t

~ (Toth Tr 5777 in camera)

1556 Around the same time ~

~ (Toth Tr 5737-39 5741 in

camera Seibert Tr 5645 in camera)

PPAB 1631446vl 20

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

a i )

1557 ~

~ (Toth Tr 5738-39 in camera)

1558 ~

~ (Toth Tr 5739 in camera) From the very beginning ~

~ (Toth Tr 5739 in camera)

1559 At that time ~

~ (Toth Tr 5739-40 in

camera)

1560 ~

~ (Toth Tr 5739-40 in camera)

1561 ~

~ (RXOI685 in camera)

PPAB 1631446vl 21

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

1562 ~

J (RXOI694 in camera) t

(RX01694 at 006 in camera)

1563 ~

~ (Toth Tr 5741 in camera) Finally t

camera)

1564 ~

Tr 5742 5744 in camera) ~

~

1565 At that time ~

Tr 5742-43 in camera RX01712 at 001 in camera)

1566 ~

~

~ (Toth Tr 5742 in

~ (Toth

~ (Toth

~

(Toth Tr 5742-43 in camera) ~

PPAB 1631446vl 22

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

) (Toth Tr 5744 in

camera)

1567 t

~ (Toth Tr 5743-44 in camera)

1568 ~

) (RXOI704 in camera)

b i )

1569 ~

~ (Toth Tr 5745 in camera RX01703 in camera)

1570 ~

) (Toth Tr 5745-46 in camera)

1571 t

) (Toth Tr 5745-46 in camera) As Toth explained

1572 ~

) (Toth Tr

5746-47 in camera)

PPAB 1631446vl 23

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

1573 ~

) (Toth Tr 5746-47 in camera)

1574 ~

) (Toth Tr 5746-47 in camera)

1575 Consequently ~

) (Toth Tr 5746 in camera) As Toth elaborated

at the November 122009 hearing ~

1576 ~

) (Toth Tr 5746 in camera)(emphasis added)

~

(Toth Tr 5772 in camera) ~

~ (Toth Tr 5747 in camera)

1577 First ~

(Toth Tr 5748 in camera)

1578 ~

)

1579 ~

) (RXOI706 in camera Toth Tr 5747-49 in camera)

) (Toth Tr 5747 in camera)

PPAB 1631446vl 24

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

1580 ~

) (Toth Tr 5780 in camera)

1581 ~

~ (Toth Tr

5747-48 in camera)

1582 Finally t

) (Toth Tr 5748-49

in camera)

1583 ~

) (Toth Tr 5749 in camera) Clearly ~

~

(PX5075 at 008 in camera)

1584 ~

) (Toth Tr

5749-50 in camera)

1585 ~

~ (Toth Tr 5749-50 in camera) ~

PPAB 1631446vl 25

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

~ (Toth Tr 5749-50 in camera) ~

)

1586 Although ~

) (Toth Tr 5750-51

in camera)

1587 ~

) (Toth Tr 5751-525755 in camera) ~

~

1588 Moreover ~

) (Toth Tr 5752 in camera)

1589 ~

PPAB 1631446vl 26

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

) (Toth Tr 5753-54 in camera)

1590 ~

) (Toth Tr 5755-56 in camera) ~

~ (Toth Tr 5756 5758 in camera) ~

) (RX01712 at 002 in camera)

1591 Thereafter ~

) (Toth Tr 5756-59 in camera)

1592 ~

~ (Toth Tr 5756 5758-59 in camera)

1593 t

PPAB 1631446vl 27

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

) (Toth Tr 5760-61 5780 in camera)

1594 ~

) (Toth Tr 5760-61 in camera Gilespie Tr 5838-39 5867-68 in camera)

~

~

1595 ~

) (Toth Tr 5760-61 in camera PX5075 at 007 in camera)

F i )

1596 ~

) (RXOI714 in camera Toth Tr 5761-62 in camera) ~

~ (RX01714 at 002 in

PPAB 1631446vl 28

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

camera) ~

) (RXOI714 in

camera)

1597 ~

~ (RXO 1687 at 002 in camera

Toth Tr 5761-62 in camera)

1598 ~

) (RX01687 at 002 in camera Seibert Tr 5686

in camera Gilespie Tr 5852-53 in camera) ~

~ (Seibert Tr 5687 in

camera RX01687 in camera) ~

~ (RX01687 at 003 in camera Seibert Tr 5686-87 in camera) ~

~ (Seibert Tr 5690 in camera)

~

~ (RXOI712 in

camera)

1599 ~

29PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

) (Seibert Tr 5690-91 in camera) ~

) (Toth Tr 5762-63 in camera RX01693 in camera RX01712 in

camera Seibert Tr 5691 in camera Gilespie Tr 5854-55 in camera)

1600 ~

) (RXOI712 in camera Toth Tr 5762-63 in camera) ~

) (RXOI712 in camera) ~

~

160 1 ~

~ (RXOI681 in camera Toth Tr 5763-64 in

camera) ~

)

1602 ~

PPAB 1631446vl 30

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

) (Gilespie Tr 5851 in camera) ~

) (Gilespie Tr 5852 in camera)

1603 ~

) (

) ) in

camera)

1604 ~

~ (Gilespie Tr 5870 in camera) ~

~ (RXOI693 in

camera see also RX01685 (~

)) in camera)

1605 ~

PPAB 1631446vl 31

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

) (Seibert Tr 5691 in camera) ~

) (Seibert Tr 5691 in camera Toth Tr

5762-63 in camera)

iv f )

1606 ~

) (Toth Tr 5737 in camera) ~

) (RXO 170 1 in camera RXO 1702 in

camera)

1607 ~

) (Toth Tr 5737 in camera) In addition ~

~ (Toth Tr 5737 in camera RX01706

in camera)

1608 ~

~ (Seibert Tr 5673 in camera Toth Tr 5737 in

camera)

1609 t

~ (RXOI719 in camera Seibert Tr 5701-03 in camera)

1610 t

~

(Toth Tr 5739-40 in camera)

PPAB 1631446vl 32

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

1611 ~

~ (Toth Tr 5737 in camera

Seibert Tr 5692-93 in camera) t

~ (Seibert Tr 5692 in camera)

1612 t

~

(RXOI692 in camera Toth Tr 5772 in camera)

1613 ~

~ (Seibert Tr

5718-19 in camera)

1614 As Toth testified ~

~ (Toth Tr 5747-49 5772 5739-40 in

camera)

1615 ~

~ (Seibert Tr 5694 in camera Toth Tr 5766 in camera)

PP AB 1631446v 1 33

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

1616 ~

~ (RXOI696 in camera Toth Tr 5764-67 in camera

Seibert Tr 5694-95 in camera)

1617 ~

~ (Toth Tr 5766-67 in camera)

1618 ~

~ (Toth Tr 5766 in camera)

1619 t

~ (Toth Tr 5765 in camera)

1620 ~

~ (Toth Tr 5766 in camera)

1621 ~

~

(Toth Tr 5767 in camera)

1622 Curently ~

~ (RX01707 at 003 in

camera)

1623 Based on the foregoing the Cour finds that ~

PPAB 1631446vl 34

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

~ The Cour fuher finds that these facts manifest that ~

)

CONCLUSIONS OF LAW

1624 As previously found in RFOFCOL 1436 Cours and the FTC must not rely on market

shares and concentration alone to determine whether a violation of Section 7 has occurred The

Merger Guidelines state that market share and concentration data provide only the staring point

for analyzing the competitive impact of a merger (Sec 20) The Guidelines fuher provide

that market share and market concentration data may either understate or overstate the likely

future competitive significance of a firm or firms in the market or the impact of a merger (Sec

152) The cours have agreed that concentration data (are) not conclusive indicators of

competitive effect United States v General Dynamics Corp 415 US 486 498 (1974)

(E)vidence of a high market share does not require a district court to conclude that there is an

antitrust violation (United States v Syufy Enterprises 903 F2d 659 665 n6 (9th Cir 1990))

because market share statistics can be misleading as to actual future competitive effect United

States v Waste Management Inc 743 F2d 976 982 (2d Cir 1984) As the DC Circuit said

anti

( e )vidence of market concentration simply provides a convenient staring point for a broader

inquiry into future competitiveness United States v Baker Hughes Inc 908 F2d 981 984

(DC Cir 1990)

1625 As this Cour has previously found Microporous was not an actual paricipant or

uncommitted entrant in Complaint Counsels SLI market in North America prior to the merger

RFOFCOL 1437-39 No evidence was presented at the hearing on November 12 2009 to alter

this conclusion

PPAB 1631446vl 35

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

1626 Evidence was introduced however at the November 12 hearing further demonstrating to

this Court that competition is robust in Complaint Counsels alleged SLI North America market

and that ~

~

1627 As found previously by this Cour ~

~ (RFOF 306) Now

~

~

1628 ~

~ (RXOI719 in camera) All of this evidence demonstrates

that even after the merger competition in North America among separator suppliers is vigorous

1629 It is appropriate for this Cour to consider post-acquisition evidence to determine that the

acquisition had no anticompetitive effect See eg United States v Intl Harvester Co 564 F2d

769 (th Cir 1977) (post acquisition evidence showed no anticompetitive conduct) Lektro- Vend

Corp v Vendo Co 660 F2d 255 (7th Cir 1981) (post acquisition evidence showed that

defendants profits and market shares declined) Vaney v Coleman Co 385 F Supp 1337

(DNH 1974) (post-acquisition evidence showed that defendant lost market share) United

PPAB 1631446vl 36

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

Brewing Corp 383 FSupp 1020 (DRI 1974) (evidence showed a decline in

market share and profits) From the evidence before this Cour the merger has had no

States v Falstaff

competitive effect in this alleged market The Courts conclusion here is buttressed by theanti

fact that ~

~

1630 The evidence from the November 12 2009 hearing further demonstrates that the

conditions for coordinated interaction do not exist in the alleged SLI market According to the

Commentary on the Merger Guidelines Successful coordination typically requires rivals (1) to

reach terms of coordination that are profitable to each of the paricipants in the coordinating

group (2) to have a means to detect deviations that would undermine the coordinated interaction

and (3) to have the ability to punish deviating firms so as to restore the coordinated status quo

and diminish the risk of deviations It may be relatively more difficult for firms to coordinate

on multiple dimensions of competition in markets with complex product characteristics or terms

of trade (Commentary on the Horizontal Merger Guidelines at 18-19)

1631 Here at the hearing on November 122009 Complaint Counsel offered no evidence to

the Court to show that these conditions can be met Rather ample evidence was presented to this

Court both through testimony and exhibits demonstrating just the opposite Indeed ~

~

PPAB 1631446vl 37

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

1632 As this Cour has previously concluded the presence of powerful customers in markets

involving infrequent purchases long-term contracts and bidding can frequently prevent

coordinated interaction (See RFOFCOL 1441 Baker Hughes Inc 908 F2d at 986 ((t)his

sophistication was likely to promote competition even in a highly concentrated market)

ABA Section of Antitrust Law Mergers and Acquisitions at 159-60 (3d ed 2008) (Courts have

recognized that evidence that a small number of buyers purchase most of the product in the

market indicates that sellers may not have a great deal of freedom in establishing prices and thus

may be less likely to adhere to a collusive agreement Sophisticated buyers are more likely to

detect collusion and offer sellers large orders to induce defections from the agreement or to

vertically integrate) FTC v Elders Grain 868 F 2d 901 905 (7th Cir 1989) (powerful buyers

may cause sellers to cheat on any price agreement) FTC v RR DonneUey amp Sons Co Civ No

90-1619 SSH 1990 US Dist LEXIS 11361 at 10 (DC Cir 1990) ((T)he sophistication and

bargaining power of buyers play a significant role in assessing the effects of a proposed

transaction) )

1633 The evidence presented at the November 12 hearing and before readily demonstrates to

this Cour that ~

~ Power buyers such as t ~ make coordinated

interaction unlikely

1634 Moreover it has been demonstrated convincingly in this hearing that ~

PPAB 1631446vl 38

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

~

1635 Complaint Counsels argument that ~ ~ is not a powerful buyer because it does not

have ~ ~ is incorrect The courts have not required a minimum market share when making powerful buyer determinations (See eg

Federal Trade Commission v Elders Grain 868 F2d 901 (7th Cir 1989) United States v Baker

Hughes Inc 908 F2d 918 (DC Cir 1990) In the Matter of Owens-Illnois Inc 115 FTC

170 (1992) United States v Archer-Daniels-Midland Co 781 FSupp 1400 (S Dist Iowa

1991)) In fact if Complaint Counsels statement were true there could be only one powerful

buyer in each market - a suggestion that is contrary to existing case law Even the Horizontal

Merger Guidelines which recognize the power buyer defense do not require that a powerful

buyer have a requisite share of the relevant purchases Rather the Guidelines note that (b )uyer

212)

1636 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

size alone is not the determining characteristic (Sec

is insufficient to show that Polypores acquisition of Microporous would har competition

because of coordinated interaction

PPAB 1631446vl 39

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

1637 The evidence adduced at the November 12 hearing further refutes Complaint Counsels

unilateral effects theory As this Cour previously found where the FTC focus in a merger case

is on the alleged dominance of the merged entity the FTC must show that the merger may

result in a single firm that so dominates a market that it is able to maintain prices above the level

that would prevail if the market were competitive and it must show that such increased prices

are accompanied by lower output In the Matter of Chicago Bridge amp Iron Co Dkt No 9300

at 7 (Jan 62005) Forsyth v Humana Inc 114 F3d 1467 1476 (9th Cir 1997) (RFOFCOL

1448)

1638 The testimony and exhibits introduced at the November 12 hearing demonstrate

Daramics complete lack of ability to unilaterally increase price In fact the evidence

demonstrates just the opposite ~

~ Monopoly power is

the power to control prices or exclude competition United States v EI duPont de Nemours

amp Co 351 US 377 391 (1956) Daramic has no ability to control prices or exclude

competition

1639 Based on the Cours foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that the evidence adduced by Complaint Counsel

is insufficient to show that Polypores acquisition of Microporous would har competition

because of anti competitive unilateral effects

1640 The evidence adduced at the November 12 hearing fuher demonstrates that Daramic

does not have monopoly power in Complaint Counsels SLI market As found previously Dr

Simpsons data shows ~

~ (RFOF 1287 1388) By

themselves those figures are too low to find monopoly power Here however the evidence

PPAB 1631446vl 40

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

shows that ~

) Accordingly ~

~

1641 Finally additional evidence was introduced at the November 12 hearing supporting this

Cours previous finding that there are no substantial barriers to entry into the production of

battery separators (RFOFCOL 1453-57) First ~

J (RFOF 1209 1212) ~

~

1642 Second ~

~

1643 Based on the Courts foregoing findings of fact and the applicable legal standards and

principles set forth herein the Cour concludes that Complaint Counsel has not shown that there

are significant bariers to entry into the production of and sale of battery separators

PPAB 1631446vl 41

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

v CONCLUSION

F or the reasons stated above and in Respondents previous submissions the Court finds

that Complaint Counsel have not proven their claims and the acquisition between Polypore and

Microporous Products has not and wil not cause competitive har in the worldwide PE

separator market Accordingly the Cour dismisses the FTCs claims with prejudice

PPAB 1631446vl 42

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

Dated December 2009 Respectfully Submitted

rOslash wA ~

Wiliam L Rikard Jr Eric D Welsh PARKER POE ADAMS amp BERNSTEIN LLP 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 372-9000

Facsimile (704) 335-9689 wiliamikard~parkerpoecom ericwelsh~parkerpoecom

John F Graybeal PARR POE ADAMS amp BERNSTEIN LLP 150 Fayettevile Street Raleigh NC 27602 Telephone (919) 835-4599

Facsimile (919) 828-0564 johngraybeal~parkerpoecom

Attorneys for Respondent

PPAB 1631446vl

CERTIFICATE OF SERVICE

I hereby certify that on December ~ 2009 I caused to be fied via hand delivery and electronic mail delivery an original and two copies of the foregoing Respondents Proposed Findings of Fact and Conclusions of Law for Re-opened Hearing iexclPUBLICI and that the electronic copy is a true and correct copy of the paper original and that a paper copy with an original signature is being fied with

Donald S Clark Secretar Office of the Secretar Federal Trade Commission 600 Pennsylvania Avenue NW Rm H-135 Washington DC 20580 secretary~ftc gov

I hereby certify that on December c= 2009 I caused to be served one copy via electronic mail delivery and four copies via hand delivery of the foregoing Respondents

Proposed Findings of Fact and Conclusions of Law for Re-opened Hearing iexclPUBLICI upon

The Honorable D Michael Chappell Administrative Law Judge Federal Trade Commission 600 Pennsylvania Avenue NW Washington DC 20580 oali~ftcgoV

I hereby certify that on December 2009 I caused to be served via first-class mail delivery and electronic mail delivery a copy of the foregoing Respondents Proposed Findings of Fact and Conclusions of Law for Re-opened Hearing iexclPUBLICI upon

1 Robert Robertson Esq Steven Dah Esq Federal Trade Commission Federal Trade Commission 600 Pennsylvania Avenue NW 600 Pennsylvania Avenue NW Washington DC 20580 Washington DC 20580 rro bertson~ftc gov sdah~ftcgov

f3 ~iquestLBrian R Wey ich PARKR POE ADAMS amp BERNSTEIN LLP Three Wachovia Center 401 South Tryon Street Suite 3000 Charlotte NC 28202 Telephone (704) 335-9534 Facsimile (704) 334-4706

PPAB 1631446vl